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    Business Tax - Midterm Reviewer

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    Andrea Mae Yutuc Penuela
    1. The document discusses estate tax in the Philippines, including what is included in the gross estate, deductions allowed, and different types of assets. 2. There are two types of gratuitous contracts related to estate tax: estate tax on inheritance, and donor tax on donations. Real, personal, and intangible assets are included in the gross estate. 3. Deductions that can be taken include claims against insolvent persons, casualty losses, indebtedness, taxes paid, transfers for public use, and the vanishing deduction which is calculated over 5 years. The standard deduction is 5M pesos.

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    © All Rights Reserved
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    Business Tax - Midterm Reviewer

    Uploaded by

    Andrea Mae Yutuc Penuela
    163 views4 pages
    1. The document discusses estate tax in the Philippines, including what is included in the gross estate, deductions allowed, and different types of assets. 2. There are two types of gratuitous contracts related to estate tax: estate tax on inheritance, and donor tax on donations. Real, personal, and intangible assets are included in the gross estate. 3. Deductions that can be taken include claims against insolvent persons, casualty losses, indebtedness, taxes paid, transfers for public use, and the vanishing deduction which is calculated over 5 years. The standard deduction is 5M pesos.

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    Chapter 2- Gross Estate Tax

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    1. The document discusses estate tax in the Philippines, including what is included in the gross estate, deductions allowed, and different types of assets. 2. There are two types of gratuitous contracts related to estate tax: estate tax on inheritance, and donor tax on donations. Real, personal, and intangible assets are included in the gross estate. 3. Deductions that can be taken include claims against insolvent persons, casualty losses, indebtedness, taxes paid, transfers for public use, and the vanishing deduction which is calculated over 5 years. The standard deduction is 5M pesos.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    163 views4 pages

    Business Tax - Midterm Reviewer

    Uploaded by

    Andrea Mae Yutuc Penuela
    1. The document discusses estate tax in the Philippines, including what is included in the gross estate, deductions allowed, and different types of assets. 2. There are two types of gratuitous contracts related to estate tax: estate tax on inheritance, and donor tax on donations. Real, personal, and intangible assets are included in the gross estate. 3. Deductions that can be taken include claims against insolvent persons, casualty losses, indebtedness, taxes paid, transfers for public use, and the vanishing deduction which is calculated over 5 years. The standard deduction is 5M pesos.

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    Estate Tax

    Onerous Contracts – may kapalit


    Gratuitous Contracts – walang kapalit

    2 Types of Gratuitous
    1. Estate Tax – inheritance
    2. Donor Tax – donation

    3 Types of Asset Intangible Asset Includes:


    1. Real Property 1. Patent
    2. Personal 2. Franchise
    3. Intangible Asset 3. Copyright
    4. Trademark
    5. Goodwill
    6. Computer Software
    7. Bank Deposit
    8. Receivables
    9. Investment in shares
    Gross Estate
    Less: Deduction
    Net Estate
    x TR 6%
    Estate Tax

    Gross Estate

    Citizen or Resident Non-resident Alien


    (All Included)

    Outside the PH Inside the PH


    (All Excluded)

    Intangible Real or
    Personal
    (Included)

    With Reciprocity Without


    (Excluded) (Included)
    Gross Estate
    Included:
    1. Assets physically in the interest
    2. Decedent’s interest – w/out physical substance ex: Receivables, Investment
    3. Asset not physically in state.
     Transfer in contemplation of death
     Transfer with retention of rights
     Revocable transfer
     Transfer w/ general power of appointment
    A→B→C Special appointment – (di kasama)
    A → B → anyone General appointment – (kasama)
     Transfer for insuficient consideration
    Formula:
    FV time of death
    Consideration Rec. (SP)
    Insuficient (Gross Estate)
     Claims against insolvent person
     Proceeds of life insurance

    Excluded:
    1. Exclusive property of surviving spouse
    2. Group insurance
    3. Page 41 & 43 (in the book)

    Life Insurance

    beneficiary

     Estate Others (3rd person)


     Executor (may will of T)
     Administrator (no will)
    (Included)
    Revocable Irrevocable
    (Included) (Excluded)
    Deductions
    1. Ordinary
    a. CLIT
     Claims against Insolvent
     How much?
    Amount Collectible ✔ (amount na hindi makukuha isasama sa deduction)
    Not the total Receivable X ( sa gross estate sinasama yung buo)
     Requirements:
    1. Incapacity – di talaga kaya magbayad 3. Not Illegal
    2. Good Faith 4. Included in Gross Estate
     Losses
     Casualty Losses How much?
     Included in gross estate - value of asset loss
     Not insured
     Not claimed as deduction for income tax
     Happen during settlement buhay X patay ✔ bayad estate tax

     Indebtedness
     Personal obligation How much?
     Good faith - value of debt
     Not illegal
     Taxes
     Not include taxes incurred after death
     Before lang mamatay pwede yung deduction
     Not include estate tax
    b. TP (Transfer for Public use)
     Asset donated to government effective on date How much?
     Included in gross estate - value of asset transferred
    c. Vanishing deduction
     Requirements:
    1. 5 years 4. Included in gross estate
    2. Identified 5. Previous estate tax is paid
    3. Inside PH 6. No vanishing deduction on previous estate tax

     How much? - 5 STEPS


    STEP 1 : Value to Take
    FV death of previous owner (SELECT LOWER)
    FV death of present owner

    STEP 2 : Compute Initial Basis


    Value to take (STEP 1)
    Less: Mortgage assume (Utang ; ex: di pa tapos bayaran yung tricycle)
    Initial Basis

    STEP 3: Compute Second Deduction


    Initial basis (STEP 2) X CLIT + TP = 2ND DEDUCTION
    Gross estate

    STEP 4: Compute Final Basis


    Initial basis (STEP 2)
    Less: Second deduction (STEP 3)
    Final Basis

    STEP 5: Compute Vanishing Deduction Rates : VR


    Final basis 0 – 1 year = 100%
    X Vanishing Rate % 1 – 2 years = 80%
    Vanishing deduction 2 – 3 years = 60%
    3 – 4 years = 40%
    4 – 5 years = 20%
    2. Special Deductions 5 years – above = 0%
    a. Standard deduction – 5M ( if di lagpas sa 5M ang gross estate wala ng babayaran)
    b. Family Home
    FV at time of death = whichever is lower, yun ang deduction
    10M
    c. Retirement Benefit (R.A. 4917)
    Retirement benefit mo from previous employer → kasama sa gross estate pero pwede
    din ideduct sa
    3. Share of Estate
    - Gross estate included common
    ex: common – 9M
    less: share of spouse - (4.5M)
    4.5M
    X 6%
    Share of Spouse

    ASSET

    Before (ikasal) During (ikasal)

    Absolute Conjugal Gratuitous Onerous


    ↓ ↓ ↓ ↓
    COMMON EXCLUSIVE EXCLUSIVE COMMON

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