FINAL

ESTATE & DONOR’S
TAX
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WITH ESTATE PLANNING
ABUZO|BONGABONG|CABRAL|CERERA|DELA
CRUZ|GUMELA|KIONG|MANGAYA|MARQUEZ|PABLO|TORRES
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estate tax 1
ESTATE TAX
2
DONOR’S TAX
3
ESTATE
PLANNING
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ESTATE TAX
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An excise tax imposed The tax measured by
on the privilege of the value of the
transferring property property transmitted at
upon the death of the the time of the death,
owner (Cabaniero, regardless of their
From Living to appreciation or
Leaving) depreciation.
ESTATE TAX
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It rests upon the principle that
the death of the an individual is
the generating source from
which the taxing power takes its
being, and that it is the power
to transmit or the transmission
from the dead to the living on
which the tax is more
immediately based (Lorenzo vs
Posadas)
object or purpose
To generate additional
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revenue for the government

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To reduce the concentration
of wealth
To provide for equal

distribution of wealth
object or purpose
It is the only method of collecting the
share which is properly due to the State
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as a partner in the accumulation of

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property which was made possible on
account of the protection given by the
State.
It is the only method of collecting the

share which is properly due to the
State as a partner in the accumulation
of property which was made possible
on account of the protection given by
the State
nature of estate tax
1. Exercise of Sovereignty
An excise tax
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2.
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3. A tax accruing at the moment
of death
4. An ad valorem tax
“...the approval of the court, sitting in probate, or as a
settlement tribunal over the deceased is not a
mandatory requirement in the collection of estate
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taxes...There is nothing in the Tax Code, and in the

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pertinent remedial laws that implies the necessity of the
probate or estate settlement court's approval of the
state's claim for estate taxes, before the same can be
enforced and collected (Marcos II vs Court of Appeals,
GR No 120880, June 5, 1997)
the law that governs the
imposition of estate tax
It is a well-settled rule that estate taxation is governed by
the statute in force at the time of the death of the
decedent. The estate tax accrues as of the death of the
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decedent and the accrual of tax is distinct from the
obligation to pay the same. Upon the death of the
decedent, succession takes place and the right of the State
to tax the privilege to transmit the estate vests instantly
upon death.
Accordingly, the tax rates and procedures prescribed under
these Regulations shall govern the estate of decedent who
died on or after the effectivity date of the TRAIN LAW (R.R.
No. 12-2018, Sec. 3)
estate tax rates
Section 22 of the TRAIN LAW
estate tax
vs. Section 84 of the Tax Code
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The Tax Code previously based on Under the TRAIN law, estate tax
the value of the net estate of the are now subject to a flat rate of 6
decedent, whether he or she is percent.
resident or non-resident of the The new computation is as follows:
Philippines, was computed based on 1.Gross estate less Allowable
a tax schedule where an estate worth Deductions = Net Proceeds
P200, 000 and over was taxed from 2. Net Proceeds multiplied by 6% =
5 percent to 20 percent. Total Estate Tax
valuation of the estate
Section 88 of the Tax Code subsists and NO AMENDMENTS were introduced.
Determination of the Value of the Estate:
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(A) Usufruct. - To determine the value of the right of usufruct, use or habitation, as
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well as that of annuity, there shall be taken into account the probable life of the
beneficiary in accordance with the latest Basic Standard Mortality Table, to be
approved by the Secretary of Finance, upon recommendation of the Insurance
Commissioner.
(B) Properties. - The estate shall be appraised at its fair market value as of the time
of death. However, the appraised value of real property as of the time of death shall
be, whichever is higher of -
(1) The fair market value as determined by the Commissioner; or
(2) The fair market value as shown in the schedule of values fixed by the Provincial
and City Assessors.
gross estate
All property of citizens and residents constitute the gross estate.
For non-resident aliens however, gross estate are properties only located in the
Philippines and include intangible personal property subject to the rule of reciprocity.
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The value of the property is determined through:
1. For lands: Whichever is higher of the Fair

Market Value given by the Commissioner or the
provincial and city assessors.
2. For stock/s: As per the stock exchange but
if not listed then it is the book value for unlisted
common shares and the par value for unlisted
preferred shares.
3. For club memberships: Most recent bid
price near date of death published in a
newspaper.
specifically included in
the gross estate
1. Decedent's Interest
Transfer in Contemplation of Death
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2.
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3. Revocable Transfer
4. Property Passing Under General Power of
Appointment
5. Proceeds of Life Insurance
6. Prior Interests
7. Transfers of Insufficient Consideration
8. Capital of the Surviving Spouse
net taxable estate
Formulas
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Single
Net Taxable Estate = Gross Estate – Allowable Deductions
Married
Net Taxable Estate = (Gross Estate – Allowable Deductions)/2
deductions allowed to estate of
citizen or resident alien - Sec. 86(A)
NIRC
Standard Deduction: P 1,000,000 Unpaid mortgages upon, or any
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indebtedness in respect to, property

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Medical Expenses: P 500,000 Property Previously Taxed (Vanishing
Funeral Expenses: P200,000 Deductions)
Judicial Expenses Transfers for public use
Claims Against the Estate Family Home: P 1,000,000
Claims Against Insolvent Persons Amount received by heirs under RA 4917
Losses Taxes
TRAIN
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Property Previously Taxed (Vanishing
Deductions)
Transfers for public use
Losses Taxes
claims against the estate
Requisites:
1. The liability represents a personal obligation of the deceased existing
at the time of his death except unpaid obligations incurred incident to
his death such as unpaid funeral expenses (i.e., expenses incurred up to
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the time of interment) and unpaid medical expenses which are classified
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under a different category of deductions pursuant to these Regulations;
2. The liability was contracted in good faith and for adequate and full
consideration in money or money’s worth;
3. The claim must be a debt or claim which is valid in law and enforceable
in court;
4. The indebtedness must not have been condoned by the creditor or the
action to collect from the decedent must not have prescribed.
5. If the claim arose out of a debt instrument, the debt instrument must be
duly notarized. Except for loans granted by financial institutions where
notarization is not part of the business practice/policy of the financial
institution.
claims against the estate
Date-of-death valuation rule:
“Tax burdens are not to be imposed, nor presumed to be
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imposed, beyond what the statute expressly and clearly imports,

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tax statutes being construed strictissimi juris against the
government. Any doubt on whether a person, article or activity is
taxable is generally resolved against taxation. Such construction
finds relevance and consistency in our Rules on Special
Proceedings wherein the term "claims" required to be presented
against a decedent's estate is generally construed to mean debts
or demands of a pecuniary nature which could have been
enforced against the deceased in his lifetime, or liability
contracted by the deceased before his death.”
(Dizon v. Court of Tax Appeals, G.R. No. 140944, April 30, 2008)
claims against insolvent
persons
• Provided that the full
amount of the
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receivables are first
included in the Gross
Estate
• Deduction from the
Gross Estate will be
the uncollectable
portion only
unpaid mortgage or
indebtedness on property
• Fair Market Value of the
property, undiminished by
mortgage or indebtedness,
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must be included in the
Gross Estate
• Accomodation Loan – valued
of the unpaid loan must be
included in the receivable of
the estate (RR12-2018)
taxes
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• Accrued as of the death of the decedent which

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were unpaid as of the time of death.
• Does not include income tax upon income received
after death, or property taxes not accrued before
his death, or the estate tax due from the
transmission of his estate.
(R.R. 2-2003)
losses
• Arising from fire, storm, shipwreck or other casualty,
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robbery, theft or embezzlement
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• Not compensated by insurance or otherwise
• Not claimed as deduction in an income tax return of
the estate subject to income tax
• Occurring during the settlement of the estate
• Occurring before the last day for the payment of the
estate tax
transfers for public use
In favor of the
Government of the
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Philippines, or any
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political subdivision
thereof, for
exclusively public
purposes.
property previously taxed
(vanishing deductions)
Requisites:
1. Present decedent died within 5 years from receipt of the
property from prior decedent or donor
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2. Property on which vanishing deduction is being claimed must
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be located in the Philippines
3. Property must have formed part of the taxable estate of
prior decedent or of taxable gift of the donor.
4. Estate tax or Donor’s tax was paid for by the prior
decedent.
5. Property must be identified as the one received from prior
decedent or donor or something in exchange therefore.
6. No vanishing deduction on the property was made on the
estate of the prior decedent.
How to compute:
1. Get the basis. This is either the value of the
property in the prior estate/donor’s tax valuation
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OR the value of the property in the present estate,
whichever is lower.
2. Reduce the basis by any payment made on any
mortgage or lien on the property
• When such mortgage or lien was used as deduction on the prior
decedent’s estate or gift of the donor.
3. Divide the value with the Gross Estate and multiply
with the Ordinary Deductions
How to compute:
4. Multiply the value with the rate provided by law to
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get the vanishing deduction.

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% When received
100 Within one year prior to the death of decedent
80 More than 1 year but not more than 2 years
60 More than 2 years but not more than 3 years
family home
• Maximum of 10M (previously 1M)
• Must be included in the Gross Estate
• Must be certified by the barangay captain of the
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locality where it is located
standard deduction
• 5M, previously 1M
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• Always deductible
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• Absorbed the
itemized deductions
for funeral, judicial
and medical
expenses.
amount received by
heirs under RA 4917
• Must have been received by heirs as consequence of
decedent’s death
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• Must be included in the Gross Estate
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Medical Expenses: P 500,000 Property Previously Taxed (Vanishing
Funeral Expenses: P200,000 Deductions)
Losses Taxes
non-resident alien - Sec. 86(B)
NIRC
Unpaid mortgages upon, or any
estate tax
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Funeral Expenses Property Previously Taxed (Vanishing
Deductions)
Claims Against the Estate
Claims Against Insolvent Persons
Losses Taxes
TRAIN
Standard Deduction: P 500,000 Unpaid mortgages upon, or any
estate tax
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Property Previously Taxed (Vanishing
Deductions)
Transfers for public use
Claims Against the Estate
Claims Against Insolvent Persons
Losses Taxes
To get the Total Deductions:
estate tax
1. Get the value of
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𝐺𝑟𝑜𝑠𝑠 𝐸𝑠𝑡𝑎𝑡𝑒 𝑃ℎ𝑖𝑙𝑖𝑝𝑝𝑖𝑛𝑒𝑠 Claims Against Estate, Claims Against Insolvent Persons,
×
𝐺𝑟𝑜𝑠𝑠 𝐸𝑠𝑡𝑎𝑡𝑒 𝑊𝑜𝑟𝑙𝑑𝑊𝑖𝑑𝑒 Unpaid Mortgages, Losses, Taxes
2. Add the value from Transfer for Public Use
3. Add Vanishing deduction

non-resident alien - Sec. 86(D)
• No deduction shall be allowed in the case of a
nonresident not a citizen of the Philippines, unless the
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executor, administrator, or anyone of the heirs, as the

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case may be, includes in the return required to be
filed under Section 90 the value at the time of his
death of that part of the gross estate of the
nonresident not situated in the Philippines.
• This provision has been deleted in the TRAIN Law
computation for decedent who was
married at the time of his death
Sec 85 (H) - Capital of the Surviving Spouse
The capital of a surviving spouse of the decedent shall
not, for the purpose of this chapter, be deemed part of
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his or her gross estate.
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Sec 86 (C) – Share in the Conjugal Property
The net share of the surviving spouse in the conjugal
partnership property as diminished by the obligations
properly chargeable to such property shall, for the
purpose of this Section, be deducted from the net
estate of the decedent.
gross estate (ACP/CPG)
EXCLUSIVE properties of the decedent
❖ Property acquired during marriage by gratuitous title
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(inheritance/donation) by either spouse, and fruits as well
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as income thereof (unless donor/testator states that they
will be part of the community property)
❖ Property for personal and exclusive use of either spouse
❖ Property acquired BEFORE MARRIAGE of either spouse

who have legitimate descendants by a former marriage
(including fruits and income)
gross estate (ACP/CPG)
The COMMUNITY properties
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❖ All properties owned by the spouse at the time of the

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marriage or acquired thereafter
Note: Proceeds of Life Insurance on Decedent’s Life

- If premium paid out of exclusive funds, belong to
exclusive property
- If premium paid out of community funds, belong to
community property
deductions from gross estate
Community / Conjugal Deductions
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❖ Allowable Deductions: Special deductions of Family

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Home, standard deduction, medical expenses,
amounts receivable under RA 4917, etc.
❖ Obligations contracted during the marriage, which

are presumed to have benefitted the whole family
deductions from gross estate
Exclusive Deductions
❖ Allowable Deductions (as to Decedent’s Exlusive
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Property)
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❖ Debts before the marriage by either spouse that DID
NOT redound to the benefit of the family
❖ Support for illegitimate children
❖ Liabilities incurred for the commission of a crime

how do we get the net estate of a
married person?
Step 0 – Get to know which are community/conjugal property
and which are exclusive
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Step 1 – Get the Net Conjugal Estate (NCE)

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NCE = Gross Conjugal Estate – Allowable Conjugal Deductions
Step 2 – Get the Decedent’s Share (DS)

DS = NCE / 2
Step 3 – Get the Gross Estate of Decedent (GED)

GED = DS + Exclusive Property
Step 4 – Get the Net Estate (NE)

NE = GED – Exclusive & Special Allowable Deductions
what if the decedent is single?
Step 1 - Determine all the
properties of the decedent.
This will belong to his Gross
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Estate.
Step 2 - Get the Net Taxable

Estate.
Net Estate = Gross Estate -
Allowable Deductions
exemption from estate tax
Sec. 87 - Exemption of Certain Acquisitions and Transmissions
The following shall not be taxed:
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(A) The merger of usufruct in the owner of the naked title;

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(B) The transmission or delivery of the inheritance or legacy by the fiduciary heir or
legatee to the fideicommissary;
(C) The transmission from the first heir, legatee or donee in favor of another
beneficiary, in accordance with the desire of the predecessor; and
(D) All bequests, devises, legacies or transfers to social welfare, cultural and charitable
institutions, no part of the net income of which inures to the benefit of any
individual:Provided, however, That not more than thirty percent (30%) of the said
bequests, devises, legacies or transfers shall be used by such institutions for
administration purposes.
tax credit for foreign estate tax
Sec. 86 (E) – Tax Credit for Estate Taxes Paid to a Foreign Country
(1) In General . — The tax imposed by this Title shall be credited with
the
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amounts of any estate tax imposed by the authority of a foreign

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country.
(2) Limitations on Credit . — The amount of the credit taken under this
Section shall be subject to each of the following limitations:
(a) The amount of the credit in respect to the tax paid to any country shall
not exceed the same proportion of the tax against which such credit is taken,
which the decedent's net estate situated within such country taxable under
this Title bears to his entire net estate; and
(b) The total amount of the credit shall not exceed the same proportion of
the tax against which such credit is taken, which the decedent's net estate
situated outside the Philippines taxable under this Title bears to his entire net
estate.
purpose
To minimize the onerous effect of taxing the same
property twice, a tax credit against Philippine Estate
Tax is allowed for estate taxes paid to Foreign
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Countries
getting the amount to be
credited
One Foreign Country
• As between the amount paid to a foreign country and the Tax Credit Limit
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(as provided below), the lower value shall be credited.
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Two or more Foreign Countries
• The same limitation applies, but the formula for the Tax Credit Limit is
modified as follows:
notice of death
Sec. 89 - Notice of Death to be Filed . — In all cases of
transfers subject to tax, or where, though exempt from
tax, the gross value of the estate exceeds Twenty
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thousand pesos (P20,000), the executor, administrator

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or any of the legal heirs, as the case may be, within
two (2) months after the decedent's death, or within a
like period after qualifying as such executor or
administrator, shall give a written notice thereof to the
Commissioner.
• Repealed by the TRAIN LAW!

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*insert forms here*
estate tax return (Sec. 90)
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when do we need to file an
estate tax return?
In all cases of transfers subject to the tax imposed
herein, or regardless of the gross value of the estate,
where the said estate consists of registered or
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registrable property such as real property, motor
vehicle, shares of stock or other similar property for
which a clearance from the Bureau of Internal Revenue
is required as a condition precedent for the transfer of
ownership thereof in the name of the transferee.
(A) requirements
… The executor, or the administrator, or any of the legal
heirs, as the case may be, shall file a return under oath in
duplicate, setting forth:
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(1) The value of the gross estate of the decedent at the time
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of his death, or in case of a nonresident, not a citizen of the
Philippines, of that part of his gross estate situated in the
Philippines;
(2)The deductions allowed from gross estate in determining
the estate as defined in Section 86; and
(3) Such part of such information as may at the time be
ascertainable and such supplemental data as may be
necessary to establish the correct taxes.
NIRC TRAIN LAW
estate tax
• Estate tax returns • Estate tax returns
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showing a gross value showing a gross value
exceeding Two million exceeding Five million
pesos (P2,000,000) pesos (P5,000,000)
shall be supported with shall be supported with
a statement duly a statement duly
certified to by a certified to by a
Certified Public Certified Public
Accountant Accountant
contents of CPA statement
(a) Itemized assets of the decedent with their
corresponding gross value at the time of his death, or
in the case of a nonresident, not a citizen of the
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Philippines, of that part of his gross estate situated in

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the Philippines;
(b) Itemized deductions from gross estate allowed in

Section 86; and
(c) The amount of tax due whether paid or still due

and outstanding.
(B) time of filing
For the purpose of determining the estate tax provided
for in Section 84 of this Code, the estate tax return
required under the preceding Subsection (A) …
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NIRC TRAIN
• …shall be filed within • …shall be filed within
six (6) months from the one (1) year from the
decedent's death. decedent's death.
(C) extension of time
The Commissioner shall
have authority to grant, in
meritorious cases, a
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reasonable extension not
exceeding thirty (30) days
for filing the return.
(D) place of filing
Except in cases where the
Commissioner otherwise permits,
the return required under
Subsection (A) shall be filed with
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an authorized agent bank, or
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Revenue District Officer,
Collection Officer, or duly
authorized Treasurer of the city
or municipality in which the
decedent was domiciled at the
time of his death or if there be
no legal residence in the
Philippines, with the Office of
the Commissioner.
RMC 34-13
• In case of a non-resident decedent, with executor
or administrator in the Philippines, the estate tax
return shall be filed with the Authorized Agent Bank
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(AAB) of the Revenue District Office (RDO) where

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such executor/administrator is registered or is
domiciled, if not yet registered with the BIR.
• For non-resident decedent with no executor or

administrator in the Philippines, the estate tax
return shall be filed with the AAB under the
jurisdiction of RDO No. 39–South Quezon City.
Sec 91 – payment of tax
(A) Time of Payment. - The estate tax imposed by
Section 84 shall be paid at the time the return is filed
by the executor, administrator or the heirs.
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NIRC (RA 8424) TRAIN (RA 10963)
The estate tax shall be paid The estate tax shall be paid
within six (6) months from within one (1) year from the
the decedent’s death and at decedent’s death and at the
the same time the estate tax same time the estate tax
return has been filed return has been filed
time of payment
NIRC (RA 8424)
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Period to pay the Estate Tax to the

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Liable for penalty

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Authorized Agent Bank
Time of 6th months One year
Death after death after death
TRAIN (RA 10963)

Liable for
Period to pay the Estate Tax to the Authorized Agent Bank
penalty
Time of 6th months One year

Death after death after death
extension of time
The Commissioner may allow an extension of time to pay the
extension subject to the following conditions:
A request for extension has been filed before the expiration of the
estate tax
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period to pay;
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The application for extension to file the return and pay the estate tax
shall be filed with the RDO where the estate is required to secure its TIN
and file the estate tax return. Said application shall be approved by the
Commissioner or his duly authorized representative;
There must be a finding that payment on the due date of the estate tax
would impose burden and hardship upon the estate or any of the heirs;
and
The extension shall not exceed 5 years if settled judicially or 2 years if

settled extrajudicially
extension of time
When the request for the extension of payment of the estate tax
has been granted:
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The amount in respect of which extension has been granted shall be paid
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on or before the date of expiration of the period of extension;
The running of the period of the Statute of Limitations on Assessments

shall be suspended within the period of such granted request for
extension;
The Commissioner or his duly authorized representative may require the

filing of a bond, not exceeding double the amount of the tax, conditioned
upon payment of the said tax; and
Any amount paid after the statutory due date of the tax, but within the
extension period, shall be subject to interest but not to surcharge
extension of time
When the request for the extension of payment of the
estate tax is by reason of negligence, intentional
disregard of rules and regulations, or fraud on the part
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of the tax payer, no extension will be granted.
payment by installment
TRAIN (RA 10963)
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In case the available cash of
NIRC (RA 8424) the estate is insufficient to
pay the total estate tax due,
• No provision for
payment by installment shall
installment be allowed within two (2)
years from the statutory
date for its payment without
civil penalty and interest
payment by installment
Cash Installment Basis
estate tax
Partial disposition of estate and
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application of its proceeds to
the estate tax due
surcharges, interest, and penalties
In the event of violation of the
law, criminal penalties and civil
liabilities are imposed:
estate tax
donor’s tax
members
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Simple neglect or 25% surcharge
Willful neglect or 50% surcharge
Interest (20% per annum shall be

imposed on the basic unpaid amount
of tax)
safeguards for the payment of
taxes
Aside from the provisions on interest, surcharges and penalties as effective
safeguards to encourage the payment of estate tax, the following measures
should be observed:
estate tax
donor’s tax
members
estate planning
1. The executor or administrator should not distribute the estate until taxes
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are paid;
2. The Register of Deeds shall not register any deed or instrument covering
the decedent’s estate until the taxes are paid;
3. No corporation shall register in its transfer books of share or bonds of the
decedent’s estate until the taxes are paid;
4. A debtor of the decedent cannot be required to pay debts to the heirs
but may pay dents to the executor or administrator; and
5. Every notary public who intervened as such in any instrument affecting the
estate or part thereof must furnish copy of said instrument to the
Commissioner of Internal Revenue.
liability for payment
(D) Liability for Payment - The estate tax imposed by Section 84
shall be paid by the executor or administrator before delivery to
any beneficiary of his distributive share of the estate. Such
beneficiary shall to the extent of his distributive share of the
estate tax
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members
estate planning
estate, be subsidiarily liable for the payment of such portion of

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the estate tax as his distributive share bears to the value of the
total net estate.
For the purpose of this Chapter, the term 'executor' or

'administrator' means the executor or administrator of the
decedent, or if there is no executor or administrator appointed,
qualified, and acting within the Philippines, then any person in
actual or constructive possession of any property of the
decedent.
Obligations of the administrator or
executor:
estate tax
donor’s tax
members
1. To administer the estate and pay

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the debts;
2. To perform all judicial orders;
3. To account within 1 year and at
any other time when required by
the probate court; and
Mr. Administrator
4. To make an inventory within 3
months from the death of the
decedent
More specifically, the bond conditioned on the faithful
execution of the administration of the decedent’s
estate requiring the special administrator to:
estate tax
donor’s tax
members
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1. Make and return a true inventory of the goods,
chattels, rights, credits, and estate of the
deceased which come to his possession and
knowledge;
2. Truly account for such as received by him when

required by the court; and
3. Deliver the same to the person appointed as

executor or regular administrator, or to such other
person as may be authorized
Sec. 92 - discharge of executor or
administrator from personal liability
extent of liability
estate tax
“The liability of the executor or
donor’s tax
members
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administrator is personal. Even if
the properties of the estate have
been distributed to the heirs, the
executor or administrator can still
be held liable for the unpaid tax.”
- CIR v Lilia Yusay Gonzales

GR No. L-19495
November 24, 1996
when may the executor or administrator
be discharged from personal liability?
(1) If the he makes a (2) Upon payment of the
estate tax
donor’s tax
members
estate planning
written application to the

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amount of which he is
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Commissioner for the notified, shall discharged
determination of the him from personal liability
amount of the estate tax in the tax thereafter found
and discharge from to be due and shall be
personal liability, entitled to a receipt or
therefore, the BIR shall writing showing such
inform the former the discharged.
amount of tax within 1
year if application is made -CIR v. McGrath
before filing of the return GR No. L-12710
Sec. 93 - definition of deficiency
Deficiency is defined as:
(a) The amount by which the tax imposed by this Chapter exceeds
the amount shown as the tax by the executor, administrator or any
of the heirs upon his return; but the amounts so shown on the return
estate tax
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members
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shall first be increased by the amounts previously assessed (or
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collected without assessment) as a deficiency and decreased by
the amount previously abated, refunded or otherwise repaid in
respect of such tax; or
(b) If no amount is shown as the tax by the executor, administrator

or any of the heirs upon his return, or if no return is made by the
executor, administrator, or any heir, then the amount by which the
tax exceeds the amounts previously assessed (or collected without
assessment) as a deficiency; but such amounts previously assessed
or collected without assessment shall first be decreased by the
amounts previously abated, refunded or otherwise repaid in
respect of such tax.
Sec. 94 - payment before delivery
by executor or administrator.
“No judge shall authorize
the executor or judicial
administrator to deliver a
estate tax
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members
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distributive share to any
party interested in the
estate unless a certification
from the Commissioner that
the estate tax has been
paid is shown”
nature of estate tax collection
It is not against the
property, not it is a claim
against the estate as such,
estate tax
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members
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but it is against the interest
or the property right which
the heir, legatee, devisee,
etc., has in the property
formerly held by the
decedent. The proceeding
has been held as a
proceeding in rem
Sec. 94 - payment before delivery
by executor or administrator.
There is nothing in the Tax Code and in
pertinent remedial law that implies the
necessity of the probate court or estate
estate tax
donor’s tax
members
estate planning
settlement court’s approval of the State’s

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claim for estate taxes before the same
can be enforced and collected by the BIR.
On the contrary, under this section, it is the
probate or settlement court which is
bidden not to authorize the delivery of
the distributive share to any interested
party without a certification from the
Commissioner showing the payment of
estate tax
- (Marcos II v. CA, GR No. G.R. No.
120880)
remedies of
estate tax
donor’s tax
members
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Government when the estate
The Heir who paid the estate
has been distributed without
tax
payment of estate taxes
Sec. 95 – duties of certain
officers and debtors
estate tax
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members
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Any Lawyer, Notary
Registry of Deeds Public and Government Debtors
Officer
Sec. 96 – restitution of tax upon
satisfaction of outstanding
obligations
If after the payment of the
estate tax, new obligations
estate tax
donor’s tax
members
of the decedent shall

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appear, and the persons
interested shall have
satisfied them by order of
the court, they shall have a
right to the restitution of the
proportional part of the tax
paid
Sec. 97 – payment of tax antecedent
to the transfer of shares, bonds or
rights
There shall not be transferred to any new owner in the
books of any corporation, sociedad anonima,
partnership, business, or industry organized or
estate tax
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members
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established in the Philippines any share, obligation,
bond or right by way of gift inter vivos or mortis causa,
legacy or inheritance, unless a certification from the
Commissioner that the taxes fixed in this Title and due
thereon have been paid is shown.
TRAIN Law
If a bank has knowledge of the death of a person, who
maintained a bank deposit account alone, or jointly with
another, it shall allow any withdrawal from the said
estate tax
donor’s tax
members
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deposit account, subject to a final withholding tax of six
percent (6%). For this purpose, all withdrawal slips shall
contain a statement to the effect that all of the joint
depositors are still living at the time of withdrawal by
any one of the joint depositors and such statement shall
be under oath by the said depositors
withdrawal from
decedent’s account
• The bank shall require prior to such withdrawal, the
presentation of BIR Form No. 1904 of the estate, duly
stamped received by the BIR. Further, all withdrawal
estate tax
donor’s tax
members
estate planning
slips shall contain the following terms and conditions:

sources
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a. a sworn statement by any one of the joint
depositors to the effect that all of the joint
depositors are still living at the time of withdrawal;
and
b. a statement that the withdrawal is subject to the

final withholding tax of 6%.
proposed amendment of
Bank Secrecy Law
The plan to ease the
country’s bank secrecy
law, aims to allow
estate tax
donor’s tax
members
estate planning
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courts to order the
opening of bank
accounts but only as
evidence for tax
evasion cases of
anyone and not just
public officials.
DONOR’S TAX
QUICK RECAP ON DONATION
estate tax
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members
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REQUISITES OF KINDS OF
WHAT IS
DONATION DONATION
DONATION?
Capacity of donor Donation mortis
Art. 725 , NCC
Donative intent causa
Art. 750, NCC
Delivery of the gift Donation inter vivos
Acceptance of the gift
DONOR’S TAX
“ a tax on the privilege of transmitting
one’s property or property rights to
estate tax
another or others without adequate and
donor’s tax
members
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full consideration (CIR vs B.F. Goodrich)”
“imposed on the transfer of property by

way of gift inter vivos (Lladoc vs CIR)”
Sec. 98
Imposition of Donor’s
Tax
estate tax
donor’s tax
members
• Excise tax or
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Privilege tax
• Right of the donor
• On the transfer,
not on the
property
transferred
rationale
to prevent nonpayment
of estate tax, rather
estate tax
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members
estate planning
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supplement it for the
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loss of government
revenue
application
NATURE OF TRANSFER
– MOST COMPREHENSIVE SENSE
estate tax
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members
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COMPLETED GIFT
• KNOWLEDGE OF
ACCEPTANCE BY
DONEE
• ACTUAL OR
CONSTRUCTIVE
DELIVERY TO DONEE
Sec. 99
Sec. 99, as amended by Sec. 99, NIRC
TRAIN LAW
(A) In General. — The tax
estate tax
donor’s tax
members
estate planning
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for each calendar year
shall be six percent
(6%) computed on the
basis of the total gifts
in excess of Two
hundred Fifty thousand
pesos (P250,000)
exempt gift made
during the calendar
year.
TRAIN LAW (B) When the donee or
estate tax
donor’s tax
members
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sources
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• Removed by TRAIN beneficiary is a
LAW stranger, the tax
• Thus, donation made payable by the donor
to any person shall be 30% of the net
regardless of gifts. xxx
relationship is
subject to 6% tax
TRAIN LAW
estate tax
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(B) Any contribution in cash (C)Any contribution in cash or
or in kind to any in kind to any candidate,
candidate, political party political party or coalition of
or coalition of parties for parties for campaign
campaign purposes shall purposes shall be governed
be governed by the by the Election Code, as
Election Code, as amended.
amended.
COPIED FROM NIRC
SEC. 99, as amended by SEC. 99, NIRC
TRAIN LAW
estate tax
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members
estate planning
sources
• FLAT RATE OF 6%
outline
• SCHEDULE OF
IN EXCESS OF RATES IN EXCESS
250,000 OF 100,000
• 250,000 PESOS – • 100,000 PESOS-
exemption per exemption per
year year
• 6% - tax on • 30% - tax on
donation made to donation made to
strangers strangers
computation for donor’s tax
based on TRAIN Law
GROSS GIFTS DURING THE YEAR
LESS: EXEMPTED DONATIONS (SEC.101, as
estate tax
donor’s tax
members
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amended)
NET GIFTS
LESS: 250,000 PESOS BASIC EXEMPTION
TAXABLE NET GIFTS
APPLY DONOR’S TAX FLAT RATE OF 6% BY
MULTIPLYING
AMOUNT OF DONOR’ TAX DUE
• THE COMPUTATION OF THE DONOR’S TAX IS ON A
CUMULATIVE BASIS OVER A PERIOD OF ONE YEAR.
Sec. 102
“If the gift is made in property, the fair market value
thereof at the time of the gift shall be considered the
amount of the gift. In case of real property, the provisions
estate tax
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members
estate planning
of Section 88(B) shall apply to the valuation thereof.

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• Property valued at the time the
gift is made.
• Fair market value between CIR
and Assessor, whichever is
higher.
• In case of improvement, tax
declaration
• Other than real property,
amount of gift
Sec. 104
Enumerates the scope of “gross estate” and “gifts”
• Real and personal property
estate tax
• Tangible or intangible or mixed
donor’s tax
members
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• Wherever situated
PROPERTIES CITIZENS( whether NON RESIDENT ALIENS
resident or nonresident
citizens) and RESIDENT
ALIENS
1. REAL PROPERTY IN
THE PHIL.
estate tax
donor’s tax
members
2. REAL PROPERTY
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OUTSIDE PHIL.
3. TANGIBLE PERSONAL
PROPERTY IN THE PHIL.
4. TANGIBLE PERSONAL
PROPERTY OUTSIDE PHIL.
5. INTANGIBLE PROPERTY Except when

exempt by
IN THE PHIL.
Reciprocity clause
6. INTANGIBLE PROPERTY
OUTSIDE PHIL
reciprocity clause
– Prevent multiplicity of taxation of the intangible
personal property in the Philippines left by non
estate tax
resident aliens, decedent , or donor
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– Applies if the foreign country of the non resident
alien:
• Did not impose transfer tax of intangible personal
property of Filipinos not residing there
• Allows similar exemption from transfer tax on intangible
personal property owned by Filipinos not residing there
– Total reciprocity
General rule: intangible personal properties of a
nonresident alien at the time of death or donation
which are transferred but situated outside the
Philippines, not included.
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Exception under this section:
– Franchise
– Shares issued by corporation organized in the Philippines
– Shares issued by any foreign corporation if such shares
acquired situs in Philippines
– Shares issued by any foreign corporation 85% of which is
located in Philippines
– Shares in any partnership or business established in
Philippines
transfer for less than adequate
or full consideration
"Adequate Consideration"
money of equal value, or some goods or services
estate tax
capable of being evaluated in money.
donor’s tax
members
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Rationale
to prevent under-declaration of selling
price to avoid full-payment of tax on
sale
The amount by which the fair market value of the
property exceeded the value of consideration is
estate tax
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members
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deemed a gift, hence subject to donor's tax
Where consideration is fictitious - the entire value of the
estate tax
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members
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property transferred is taxable
Limitation of Application
Sec. 100 does not apply to real property that has been
subjected to capital gains tax under Sec. 24(D).
estate tax
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Ordinary Assets
"Other than real property referred to in Sec.
24(D)"
Capital Assets
The difference in the supposed taxable value
cannot be subjected to donor's tax because the
sale of capital asset is subject to final capital
gains tax based on a presumed value, which is
either the gross selling price/zonal value/value in
Tax Declaration, whichever is higher.
TRAIN Law added a proviso:
● Transfers made in the ordinary course of business
estate tax
(transaction which is bona fide, at arm's length, and
donor’s tax
members
estate planning
sources
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free from donative intent) = made for an adequate
and full consideration
cancellation of indebtedness
Condonation or remission of debt is deemed a
donation.
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There is no donation if cancellation of indebtedness is

due to the rendition of service.
estate tax
donor’s tax
members
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sources
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There is no donation if a corporation forgives the debt
of its stockholder
estate tax
donor’s tax
members
estate planning
sources
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Other cancellations of indebtedness where there is no
donation due to lack of donative intent:
estate tax
A write-off of the advances to a company which has
donor’s tax
members
○
estate planning
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ceased its business operations and corporate existence,
and its shares have a negative book value, showing that
the debt is uncollectible
○ Where a company defaulted on all its obligations, and in
order to settle its liabilities, offered its creditor to
purchase its debts instruments at an amount lower than
the principal and interest due on the debt to which the
creditor agreed; Condonation by holders of debt
instruments, is not subject to donor's tax.
deductions and
exemptions
Citizen or Non-
Resident Resident
Aliens Aliens
estate tax
donor’s tax
members
estate planning
sources
Standard Deduction of ₱250,000 Yes Yes
outline
(Note: This was increased from ₱100,000)
Dowries to the amount of ₱10,000 Yes No
(Note: This was repealed by the TRAIN Law)
Donations to the National Government or any entity Yes Yes
created by any of its agencies not conducted for
profit, or to any political subdivision
Donations to educational and/or charitable, religious, Yes Yes
cultural or social welfare corporation, institution,
accredited NGO, trust or philanthropic organization or
research institution or organization
deductions and
exemptions
Others
estate tax
donor’s tax
members
estate planning
sources
• Encumbrance assumed
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by the donee (Sec. 12,
par. 7, R.R. No. 12-18)
• Under special laws
Rule on political
contributions
example
Mama’s gross gifts:
1. Ring, as dowry (₱2,000,000), to grandson
estate tax
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members
estate planning
sources
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Michelle’s gross gifts:
1. Picasso painting (₱100,000,000) to International
Museum of Fine Arts
Gabrielle’s gross gifts:

1. Raw land (₱30,000,000) to orphanage
2. Copyright of both songs (₱5,000,000) to son
3. Raw land (₱30,000,000) to DOH
Mama’s gross gifts: ₱2,000,000
1. Ring, as dowry (₱2,000,000), to grandson
NIRC TRAIN
estate tax
donor’s tax
members
estate planning
Deductions ₱100,000 ₱250,000

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₱10,000 ₱0 (provision
deleted)
Tax Rate ₱44,000 + 8% in 6%
excess of
₱1,000,000
DONOR’S TAX ₱115,200 ₱105,000
Michelle’s gross gifts: ₱100,000,000
1. Picasso painting (₱100,000,000) to International Museum
of Fine Arts
estate tax
donor’s tax
members
estate planning
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NIRC TRAIN
outline
Deductions ₱100,000 ₱250,000
Tax Rate 30% 6%
DONOR’S TAX ₱29,970,000 ₱5,985,000

Gabrielle’s gross gifts: ₱65,000,000
1. Raw land (₱30,000,000) to orphanage
2. Copyright of both songs (₱5,000,000) to son
3. Raw land (₱30,000,000) to DOH
estate tax
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members
estate planning
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NIRC TRAIN
Deductions and ₱100,000 ₱250,000
Exemptions
₱30,000,000 ₱30,000,000
₱30,000,000 ₱30,000,000
Tax Rate ₱204,000 + 10% in 6%
excess of
₱3,000,000
DONOR’S TAX ₱394,000 ₱285,000
tax credit: one foreign country
Whichever is lower
of:
estate tax
donor’s tax
members
estate planning
1. Actual donor’s
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tax paid to
foreign country
2. Tax credit limit:
𝑵𝒆𝒕 𝑮𝒊𝒇𝒕𝒔 (𝒇𝒐𝒓𝒆𝒊𝒈𝒏 𝒄𝒐𝒖𝒏𝒕𝒓𝒚)
× 𝑷𝑯 𝑫𝒐𝒏𝒐𝒓′ 𝒔 𝑻𝒂𝒙 = 𝑻𝒂𝒙 𝑪𝒓𝒆𝒅𝒊𝒕 𝑳𝒊𝒎𝒊𝒕
𝑻𝒐𝒕𝒂𝒍 𝑵𝒆𝒕 𝑮𝒊𝒇𝒕𝒔 (𝒘𝒊𝒕𝒉𝒊𝒏 & 𝒐𝒖𝒕𝒔𝒊𝒅𝒆 𝑷𝑯)
two or more foreign countries
Whichever is lowest of:
1. Total actual donor’s tax paid to all foreign countries
estate tax
donor’s tax
members
1. Total of whichever is lower of actual donor’s tax paid to foreign

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country or tax credit limit per foreign country
• Tax credit limit per foreign country
𝑵𝒆𝒕 𝑮𝒊𝒇𝒕𝒔 (𝒇𝒐𝒓𝒆𝒊𝒈𝒏 𝒄𝒐𝒖𝒏𝒕𝒓𝒚)
𝑻𝒐𝒕𝒂𝒍 𝑵𝒆𝒕 𝑮𝒊𝒇𝒕𝒔 (𝒘𝒐𝒓𝒍𝒅)
2. Total of whichever is lower of total actual donor’s taxes paid to

foreign countries or total tax credit limit of all foreign countries
• Tax credit limit of all foreign countries
𝑵𝒆𝒕 𝑮𝒊𝒇𝒕𝒔 (𝒐𝒖𝒕𝒔𝒊𝒅𝒆 𝑷𝑯)
𝑻𝒐𝒕𝒂𝒍 𝑵𝒆𝒕 𝑮𝒊𝒇𝒕𝒔 (𝒘𝒊𝒕𝒉𝒊𝒏 & 𝒐𝒖𝒕𝒔𝒊𝒅𝒆 𝑷𝑯)
example – one foreign country
X made the following donations and paid the
corresponding donor’s taxes:
estate tax
donor’s tax
members
estate planning
sources
outline
Philippines Japan Total
Net Gifts ₱4,000,000 ₱1,000,000 ₱5,000,000
Actual Donor’s ₱50,000 ₱100,000 ₱150,000
Tax Paid (of ₱225,000)
𝑁𝑒𝑡 𝐺𝑖𝑓𝑡𝑠 (𝑓𝑜𝑟𝑒𝑖𝑔𝑛 𝑐𝑜𝑢𝑛𝑡𝑟𝑦)
× 𝑃𝐻 𝐷𝑜𝑛𝑜𝑟 ′ 𝑠 𝑇𝑎𝑥 = 𝑇𝑎𝑥 𝐶𝑟𝑒𝑑𝑖𝑡 𝐿𝑖𝑚𝑖𝑡
𝑇𝑜𝑡𝑎𝑙 𝑁𝑒𝑡 𝐺𝑖𝑓𝑡𝑠 (𝑤𝑖𝑡ℎ𝑖𝑛 & 𝑜𝑢𝑡𝑠𝑖𝑑𝑒 𝑃𝐻)
estate tax
donor’s tax
members
1,000,000
estate planning
sources
× 225,000 = 45,000
outline
5,000,000
Thus:
1. Actual donor’s tax paid to foreign country = ₱100,000
2. Tax credit limit = ₱45,000
The lower amount is the tax credit limit of ₱45,000

Hence, the PH donor’s tax payable is ₱130,000
estate tax
donor’s tax
members
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sources
outline
𝑃𝐻 𝑑𝑜𝑛𝑜𝑟 ′ 𝑠 𝑡𝑎𝑥 𝑑𝑢𝑒
− 𝑑𝑜𝑛𝑜𝑟 ′ 𝑠 𝑡𝑎𝑥 𝑝𝑎𝑖𝑑, 𝑖𝑓 𝑎𝑛𝑦 + 𝑡𝑎𝑥 𝑐𝑟𝑒𝑑𝑖𝑡 𝑙𝑖𝑚𝑖𝑡
= 𝑃𝐻 𝑑𝑜𝑛𝑜𝑟 ′ 𝑠 𝑡𝑎𝑥 𝑝𝑎𝑦𝑎𝑏𝑙𝑒
225,000 − 50,000 + 45,000 = 130,000

example – two or more foreign
countries
X made the following donations and paid the
corresponding donor’s taxes:
estate tax
donor’s tax
members
estate planning
sources
outline
Philippines Japan France Total
Net Gifts ₱4,000,000 ₱1,000,000 ₱3,000,000 ₱8,000,000
Actual ₱100,000 ₱20,000 ₱280,000 ₱400,000
Donor’s Tax (of
Paid ₱225,000)
For Japan:
estate tax
donor’s tax
members
estate planning
1,000,000
sources
outline
× 225,000 = 28,125
8,000,000
For France:
3,000,000
× 225,000 = 84,375
8,000,000
For Japan:
The lower amount is the actual donor’s tax paid to foreign country of
₱20,000
estate tax
donor’s tax
members
For France:
estate planning
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outline
The lower amount is the tax credit limit of ₱84,375
Thus, the total of lower of actual donor’s tax paid to foreign country or tax
credit limit per foreign country is ₱104,375
෍ 𝑙𝑜𝑤𝑒𝑟 𝑜𝑓𝑎𝑐𝑡𝑢𝑎𝑙 𝑑𝑜𝑛𝑜𝑟 ′ 𝑠 𝑡𝑎𝑥 𝑝𝑎𝑖𝑑 𝑡𝑜 𝑓𝑜𝑟𝑒𝑖𝑔𝑛 𝑐𝑜𝑢𝑛𝑡𝑟𝑦 𝑜𝑟 𝑡𝑎𝑥 𝑐𝑟𝑒𝑑𝑖𝑡 𝑙𝑖𝑚𝑖𝑡 = 𝑡𝑜𝑡𝑎𝑙 𝑎𝑚𝑜𝑢𝑛𝑡
20,000 + 84, 375 = 104,375

𝑁𝑒𝑡 𝐺𝑖𝑓𝑡𝑠 (𝑜𝑢𝑡𝑠𝑖𝑑𝑒 𝑃𝐻)
4,000,000
× 225,000 = 112,500
8,000,000
estate tax
donor’s tax
members
estate planning
Thus:
sources
outline
1. Total actual donor’s tax paid to all foreign countries = ₱400,000
2. Total of whichever is lower of actual donor’s tax paid to foreign country or
tax credit limit per foreign country = ₱104,375
3. Total of whichever is lower of total actual donor’s taxes paid to foreign
countries or total tax credit limit of all foreign countries = ₱112,500
The lowest amount is the total tax credit limit per foreign country = ₱104,375
Hence, the PH donor’s tax payable is ₱20,625
estate tax
donor’s tax
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estate planning
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𝑃𝐻 𝐷𝑜𝑛𝑜𝑟 ′ 𝑠 𝑇𝑎𝑥 𝐷𝑢𝑒 − 𝑃𝐻 𝐷𝑜𝑛𝑜𝑟 ′ 𝑠 𝑇𝑎𝑥 𝑃𝑎𝑖𝑑, 𝐼𝑓 𝐴𝑛𝑦 + 𝑇𝑎𝑥 𝐶𝑟𝑒𝑑𝑖𝑡 𝐿𝑖𝑚𝑖𝑡
= 𝑃𝐻 𝐷𝑜𝑛𝑜𝑟 ′ 𝑠 𝑇𝑎𝑥 𝑃𝑎𝑦𝑎𝑏𝑙𝑒
225,000 − 100,000 + 104,375 = 20,625

filing of return and payment
of tax
Requirements:
Any individual who makes any transfer by gift (except those
which, under Section 101, are exempt from the tax provided
estate tax
donor’s tax
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estate planning
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for in this Chapter) shall, for the purpose of the said tax,
outline
make a return under oath in duplicate. The return shall set
forth:
(1) Each gift made during the calendar year which is to be included
in computing net gifts;
(2) The deductions claimed and allowable;
(3) Any previous net gifts made during the same calendar year;
(4) The name of the donee; and
(5) Such further information as may be required by rules and
regulations made pursuant to law.
*Section 103(A) of the National Internal Revenue Code of
1997
persons liable
Personal liability of a the donor,
whether natural or juridical,
resident or nonresident, who
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members
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transfers or causes the transfer of
outline
property by gift, any provision in
the deed of donation. Such
liability cannot be affected by
contract but it is without prejudice
to an agreement to demand
reimbursement from the other
party.
contents of donor’s tax
return
1) Each gift made during the
calendar year which is to
be included in computing net
gifts;
estate tax
donor’s tax
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2) The deductions claimed and
allowable;
3) Any previous net gifts made
during the same calendar
year;
4) The name of the donee; and
5) Such further information as
may be required by rules
and regulations made
pursuant to law.
time of filing
The return of the donor
required in this Section
estate tax
shall be filed within
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thirty (30) days after the
date the gift is made
and the tax due thereon
shall be paid at the time
of filing.
where to file
Except in cases where the Commissioner otherwise
permits, the return shall be filed and the tax paid to
estate tax
an:
donor’s tax
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1) Authorized agent bank
2) Revenue District Officer
3) Revenue Collection Officer or
4) Duly authorized Treasurer of the city
or municipality where the donor was
domiciled at the time of the transfer,
or if there be no legal residence in the
Philippines, with the Office of the
Commissioner.
In the case of gifts made by a
nonresident, the return may be filed
estate tax
donor’s tax
members
with the Philippine Embassy or

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Consulate in the country where he is
domiciled at the time of the transfer, or
directly with the Office of the
Commissioner.
Exemption from donor’s tax
To be exempt from Donor’s Tax and to claim full deduction
of the donation given to qualified donee institution, the
donor shall:
estate tax
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Give a Notice of Donation on every donation worth at least
P50 000 to the Revenue District Office which has
jurisdiction over his place of business within thirty (30)
days after receipt of the qualified donee institution duly
issued Certificate of Donation, which shall be attached to
the said Notice of Donation.
Stating that not more than thirty percent (30%) of the said
donation gifts for the taxable year shall be used by such
accredited non-stock, non-profit corporation/NGO
institution. (Revenue Regulation 2-2003)
penalties
A) There shall be imposed, in addition to the tax required to be
paid, a penalty equivalent to twenty-five percent (25%) of the
amount due, in the following cases:
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Failure to file any return and pay the tax due thereon as required under
the provisions of this Code or rules and regulations on the date
prescribed; or
Unless otherwise authorized by the Commissioner, filing a return with an
internal revenue officer other than those with whom the return is
required to be filed; or
Failure to pay the deficiency tax within the time prescribed for its
payment in the notice of assessment; or
Failure to pay the full or part of the amount of tax shown on any return
required to be filed under the provisions of this Code or rules and
regulations, or the full amount of tax due for which no return is required
to be filed, on or before the date prescribed for its payment.
penalties
In case of willful neglect to file the return within the period prescribed
by this Code or by rules and regulations, or in case a false or
fraudulent return is willfully made:
estate tax
donor’s tax
members
The penalty to be imposed shall be fifty percent (50%) of the tax or

estate planning
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of the deficiency tax, in case, any payment has been made on the
basis of such return before the discovery of the falsity or fraud
Provided, That a substantial under-declaration of taxable sales,
receipts or income, or a substantial overstatement of deductions, as
determined by the Commissioner pursuant to the rules and regulations
to be promulgated by the Secretary of Finance, shall constitute prima
facie evidence of a false or fraudulent return.
That failure to report sales, receipts or income in an amount exceeding
thirty percent (30%) of that declared per return, and a claim of
deductions in an amount exceeding (30%) of actual deductions, shall
render the taxpayer liable for substantial under-declaration of sales,
receipts or income or for overstatement of deductions, as mentioned
herein.
ESTATE PLANNING
Manner of conserving the value of an
individual's real and personal properties upon
estate tax
donor’s tax
members
transmission to his heirs
estate planning
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Plan by which he arranges to transfer his wealth
at appropriate times to parties of his choice in
order to fulfill his wishes and objectives in the
most effective means
It involves the skillful administration of

properties while managing taxes to the best
possible extent
ESTATE PLANNING
It is an essential part of retirement planning and
financial planning
estate tax
donor’s tax
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estate planning
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Consists of building his estate through savings,
investment and insurance
Process of accumulating wealth, managing it

appropriately and disposing it in the manner
that the estate owner wishes.
Involves properly handling the assets while alive and

systemically dealing with these assets after death.
“In effect, the Delpher Trades Corporation is a business conduit of
the Pachecos. What they really did was to invest their properties
and change the nature of their ownership from unincorporated to
incorporated form by organizing Delpher Trades Corporation to
take control of their properties and at the same time save on
inheritance taxes.”
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estate planning
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“The records do not point to anything wrong or objectionable about
this "estate planning" scheme resorted to by the Pachecos. "The
legal right of a taxpayer to decrease the amount of what
otherwise could be his taxes or altogether avoid them, by means
which the law permits, cannot be doubted.“
- Delpher Trades Corp. v. IAC
guide in estate planning
1. Inventory
2. Determine what you want to do with
estate tax
donor’s tax
members
assets (e.g. How much to give and to
estate planning
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whom)
3. Prepare liquidity for immediate
expenses
4. Arrange documents such as wills and
deed of donations or set up trust fund
5. Plan on how to manage or minimize
taxes legally
6. Regularly review and revise the
original estate plan
3 aspects of estate planning
estate tax
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estate planning
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Estate
Wealth Property
planning
accumulation disposition
tools
problems encountered when
there is no plan
• Family members do not know where to look for titles of
properties, bank passbooks, stock or bond certificates, jewelry
or any other assets of value
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estate planning
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• Liquidity problems or no cash to pay for taxes
• If the breadwinner dies, source of income will suddenly stop
• In case there is no will, family members may fight over the
ownership of preferred assets
• Administration problems especially if the estate owner left
business and properties which need proper handling and
management
objectives
• To ensure that the estate
owner’s wishes will be
estate tax
attained
donor’s tax
members
estate planning
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• To provide protection to
those you love especially the
family
• To reduce your tax liability
by minimizing taxes and
other expenses
• To avoid or reduce conflict
objectives
• To see children enjoy
estate tax
donor’s tax
members
estate planning
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property while donor is alive
• To provide for guardians
who will take care of minor
children and incapacitated
• To avoid probate court
involvement
development
1. Establish your goals and
objectives
2. Analyze and evaluate
estate tax
donor’s tax
members
estate planning
your current financial
sources
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situation
3. Formulate practical
strategies by selecting
suitable estate planning
tools
4. Develop an estate plan
5. Implement and update
the estate plan
establish your goals and
objectives
Example of estate goals:
• Have adequate cash to pay for taxes and costs associated with death
estate tax
donor’s tax
•
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Keep emergency funds in case of disability or incapacity
estate planning
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• Earn passive income from assets owned
• Arrange for business succession program
• Bestow gifts to non-heirs
• Donate to charitable institutions
establish your goals and
objectives
Questions to ask:
● Who will be the
estate tax
donor’s tax
members
recipients of the
estate planning
sources
outline
estate?
● How much will be
given?
● How will the
beneficiaries
receive their
assets?
analyze and evaluate your
current financial situation
In this process, you need
estate tax
donor’s tax
members
to complete and Asset
estate planning
sources
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Inventory Worksheet
provided by the Estate
Planner or Financial
Planner.
analyze and evaluate your
current financial situation
Types of Assets
Liquid Assets - easily converted to
cash
estate tax
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estate planning
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outline
Immovable Assets - affixed to a
land so these cannot be removed
or transferred
Movable Assets - can be moved
from one place to another
Business Assets - used or related
to business
Intellectual Properties - intangible
assets such as patent, copyright,
and trademark
formulate practical strategies by
selecting suitable estate planning
tools
1. use of and/or account
2. will
estate tax
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members
estate planning
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outline
3. donation
4. sale
5. incorporation of family
assets
6. trust
7. life insurance
develop an estate plan
Estate plan can be arranged by detailing the following:
• Summary of your financial
estate tax
donor’s tax
members
estate planning
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outline
assets
• Established goals and
objectives
• Proposed action plan
• Authorization to proceed
with the plan
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sources implement and update the
estate plan
estate planning
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estate planning
management tools in
estate planning
donor’s tax
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use of and/or accounts
• “And/Or” accounts are useful when one of the owners
gets sick or incapacitated.
estate tax
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members
estate planning
• There is no need for the sick or disabled account
sources
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holder to sign in case of partial withdrawal.
• In case of full withdrawal and one party is not fit to
sign the documents, his thumb mark/fingerprint may
be allowed by financial institutions, hence, joint
accounts can be an easy way to plan incapacity.
Before enactment of the After the TRAIN Law
TRAIN Law
Sec 97 - “if a bank has
estate tax
donor’s tax
members
estate planning
Sec 97 - “if a bank has knowledge of the death of a
sources
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knowledge of the death of a person, who maintained a bank
person, who maintained a bank deposit alone or jointly with
deposit account alone or jointly another, it shall allow
with another, it shall not allow withdrawal from the said
any withdrawal from said deposit account subject to a
deposit account unless the final withholding tax of 6%,
Commissioner has certified that provided, that the withdrawal
the taxes imposed under Title III shall be made within 1 year
of the code have been paid.” from death of decedent.”
NIRC TRAIN Law
estate tax
donor’s tax
members
estate planning
sources
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Final Withholding Tax on Final Withholding Tax on
Interest Income Interest Income
● 20% for Peso Deposit ● 20% for Peso Deposit
● 7.5% for Foreign ● 15% for Foreign
Currency Savings Currency Savings
WITHOUT ESTATE PLANNING
NIRC TRAIN Law
Properties exclusive conjugal total exclusive conjugal total
Townhouse in Laguna 75,000,000.00 75,000,000.00
Condominium in BGC 10,000,000.00 10,000,000.00
3 Raw Lands (P30M each) 90,000,000.00 90,000,000.00
Shares of Stock 25,000,000.00 25,000,000.00
Family Heirlooms 15,000,000.00 15,000,000.00
3 cars (5M x 3) 15,000,000.00 15,000,000.00
Painting - van gogh 50,000,000.00 50,000,000.00
Painting - picasso 100,000,000.00 100,000,000.00
Copyright (P2.5M each) 5,000,000.00 5,000,000.00
BPI account 50,000,000.00 50,000,000.00
Cash in vault 10,000,000.00 10,000,000.00
St Benedict Medalion 500,000.00 500,000.00
Family Home 100,000,000.00 100,000,000.00
Gross estate 430,500,000.00 115,000,000.00 545,500,000.00 430,500,000.00 115,000,000.00 545,500,000.00
Deductions:
Family Home 1,000,000.00 10,000,000.00
Standard Deduction 1,000,000.00 5,000,000.00
Share of Surviving Spouse 57,500,000.00 57,500,000.00 57,500,000.00
Total Deductions 59,500,000.00 72,500,000.00
Net Taxable Estate 486,000,000.00 473,000,000.00
Rate of estate tax 0.06
Estate Tax 96,415,000.00 28,380,000.00
NIRC TRAIN Law
3 Raw Lands (P30M each) 90,000,000.00 90,000,000.00
Shares of Stock 25,000,000.00 25,000,000.00
3 cars (5M x 3) 15,000,000.00 15,000,000.00
BPI account 50,125,000.00 50,125,000.00
Cash in vault 10,025,000.00 10,025,000.00
Family Home 100,000,000.00 100,000,000.00
Gross estate 370,500,000.00 175,150,000.00 545,650,000.00 370,500,000.00 175,150,000.00 545,650,000.00
Deductions:
Family Home 1,000,000.00 10,000,000.00
Standard Deduction 1,000,000.00 5,000,000.00
Share of Surviving Spouse 87,575,000.00 87,575,000.00 87,575,000.00
Total Deductions 89,575,000.00 102,575,000.00
Net Taxable Estate 456,075,000.00 443,075,000.00
Rate of estate tax 0.06
Estate Tax 90,430,000.00 26,584,500.00
WITHOUT ESTATE WITH ESTATE
estate tax
donor’s tax
members
estate planning
PLANNING PLANNING
sources
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Interest Income (assuming interest
rate of 0.25%) NIRC TRAIN NIRC TRAIN
BPI account 125,000.00 125,000.00 125,000.00 125,000.00
cash in vault 25,000.00 25,000.00
Total Interest income 150,000.00 150,000.00

Final Withholding Tax 20% 20% 20% 20%
25,000.00 25,000.00 30,000.00 30,000.00

will
Instrument which can be used by a testator in a form
prescribed by law to declare or inform his wishes which
estate tax
will take effect upon his death
donor’s tax
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estate planning
sources
outline
Testamentary succession - estate is transferred to the
heirs upon the estate owner’s death through the last will
and testament
will
Conditions in writing a will
Executed by an individual aged 18 years old
estate tax
donor’s tax
●
members
estate planning
sources
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and above
● Testator must be of sound mind
● Written and in a language or dialect known
to the testator
● Must be in prescribed form
● Individual act
will
The will can do the following:
Name the executor
estate tax
donor’s tax
●
members
estate planning
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● Name the recipients of gifts and bequests
● Name the guardian for testator’s children who
are minors
will
Types of will
● Notarial
estate tax
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members
estate planning
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Holographic
outline
●
Living will - document signed ahead of time by a

person while in good health specifying the medical
treatment that he would like to receive in case he can
no longer express or communicate his wishes
members
sources
●
●
judicial
Extrajudicial
Forms of estate settlement
will
estate planning
donor’s tax
estate tax
outline
will
NIRC TRAIN Law
estate planning
estate tax
donor’s tax
members
sources
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1. Estate Tax
1. Estate Tax
● Maximum of 20% on the net
● 6% of net estate
estate
2. Probate fees
2. Probate fees
● Depending on value of property
● Depending on value of property
3. Additional Legal Costs
3. Additional Legal Costs
● For notarial wills
● For notarial wills
donation
● Donation is a voluntary transfer of an asset from
one person to another without any compensation.
estate tax
Donor is required to pay donor’s tax upon giving the
donor’s tax
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estate planning
●
sources
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property
donation
NIRC TRAIN Law
1. Donor’s Tax
estate tax
donor’s tax
members
estate planning
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1. Donor’s Tax ● 6% for net donations for gifts
above P200K per year
● Maximum of 15% for gifts above
P100K per year 2. Documentary Stamp Tax
● 30% for gifts to strangers
● P15 for amount not exceeding
2. Documentary Stamp Tax P1,000
● Additional P15 for each
● P15 per deed
succeeding P1,000 or fractional
part
NIRC TRAIN Law
3 Raw Lands (P30M each) 90,000,000.00 90,000,000.00
Shares of Stock 25,000,000.00 25,000,000.00
3 cars (5M x 3) 15,000,000.00 15,000,000.00
BPI account 50,000,000.00 50,000,000.00
Cash in vault 10,000,000.00 10,000,000.00
Family Home 100,000,000.00 100,000,000.00
gross estate 430,500,000.00 115,000,000.00 545,500,000.00 430,500,000.00 115,000,000.00 545,500,000.00
deductions:
family home 1,000,000.00 10,000,000.00
standard deduction 1,000,000.00 5,000,000.00
share of surviving spouse 57,500,000.00 57,500,000.00 57,500,000.00
total deductions 59,500,000.00 72,500,000.00
net estate 486,000,000.00 473,000,000.00
rate of estate tax 0.06
estate tax 96,415,000.00 28,380,000.00
NIRC TRAIN Law
Condominium in BGC - -
3 Raw Lands (P30M each) 90,000,000.00 90,000,000.00
Shares of Stock 25,000,000.00 25,000,000.00
3 cars (5M x 3) 15,000,000.00 15,000,000.00
BPI account 50,000,000.00 50,000,000.00
Cash in vault 10,000,000.00 10,000,000.00
Family Home 100,000,000.00 100,000,000.00
gross estate 420,500,000.00 115,000,000.00 535,500,000.00 420,500,000.00 115,000,000.00 535,500,000.00
deductions:
family home 1,000,000.00 10,000,000.00
net estate 476,000,000.00 463,000,000.00
estate tax 94,415,000.00 27,780,000.00
donation
estate tax
donor’s tax
members
estate planning
NIRC TRAIN
sources
outline
Donor's Tax 1,004,000.00 600,000.00
Documentary Stamp
Tax 15.00 150,000.00
sale
• Sale is a transfer of property ownership in exchange for
payment of money or consideration.
estate tax
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estate planning
• Capital Gains Tax is required to be paid in the sale of the
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following non-business assets:
1. Real Properties located in the Philippines and held as capital assets
2. Shares of stock of a domestic corporation that are not sold through local stock
exchange
• CAPITAL GAINS TAX is a tax that is imposed on earnings that

the seller has gained from the sale of CAPITAL ASSETS.
sale
SALE OF REAL PROPERTY
• Seller is required to pay CGT except those real properties which are non-
business assets
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• Effect of TRAIN on CGT: rate is fixed at 6%
outline
• Example: Leaseback Agreement
SALE OF SHARES OF STOCK

• CGT is imposed if there is a net gain in the sale
• TRAIN Law increased the CGT for net capital gains and net gains in excess
to a fixed rate of 15%
NIRC TRAIN Law
1. Capital Gains Tax
1. Capital Gains Tax
• 6% for capital asset of individual and
• 6% for capital asset of individual and
corporation
corporation
2. Income tax
2. Income tax
• 5% to 32% for ordinary asset of an
• New rates as per TRAIN Law
individual
3. Corporate Tax
3. Corporate Tax
30% for ordinary asset of a corporation
• 30% for ordinary asset of a corporation
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estate planning
4. Documentary Stamp Tax
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• P15 for P1,000 of the gross selling price/
• P15 for P1,000 of the gross selling price/
zonal value or fair market value, whichever is
zonal value or fair market value, whichever is
higher
higher
• Additional P15 for each succeeding P1,000
• Additional P15 for each succeeding P1,000
or fraction thereof
or fraction thereof
5. Transfer Tax
5. Transfer Tax
• 0.25% to 0.75% of the selling price or zonal
• 0.25% to 0.75% of the selling price or zonal
value or FMV, whichever is higher
value or FMV, whichever is higher
6. Property Registration Fee
6. Property Registration Fee
• 0.25% of the selling price or zonal value or
• 0.25% of the selling price or zonal value or
FMV, whichever is higher
FMV, whichever is higher
7. Creditable Withholding Tax
7. Creditable Withholding Tax
• 1.5% to 6% of the ordinary asset
• 1.5% to 6% of the ordinary asset
8. Value Added Tax
8. Value Added Tax
• 12% of the gross selling price
• 12% of the gross selling price
NIRC TRAIN Law
3 Raw Lands (P30M each) 90,000,000.00 90,000,000.00
Shares of Stock 25,000,000.00 25,000,000.00
Proceeds from sale of townhouse
3 cars (5M x 3) 15,000,000.00 15,000,000.00
BPI account 50,000,000.00 50,000,000.00
Cash in vault 10,000,000.00 10,000,000.00
Family Home 100,000,000.00 100,000,000.00
gross estate 430,500,000.00 115,000,000.00 545,500,000.00 430,500,000.00 115,000,000.00 545,500,000.00
deductions:
family home 1,000,000.00 10,000,000.00
net estate 486,000,000.00 473,000,000.00
estate tax 96,415,000.00 28,380,000.00
NIRC TRAIN Law
Townhouse in Laguna - -
3 Raw Lands (P30M each) 90,000,000.00 90,000,000.00
Shares of Stock 25,000,000.00 25,000,000.00
Proceeds from sale of townhouse 70,500,000.00 70,500,000.00
3 cars (5M x 3) 15,000,000.00 15,000,000.00
BPI account 50,000,000.00 50,000,000.00
Cash in vault 10,000,000.00 10,000,000.00
Family Home 100,000,000.00 100,000,000.00
gross estate 426,000,000.00 115,000,000.00 541,000,000.00 426,000,000.00 115,000,000.00 541,000,000.00
deductions:
family home 1,000,000.00 10,000,000.00
net estate 481,500,000.00 468,500,000.00
estate tax 95,515,000.00 28,110,000.00
sale
NIRC TRAIN
estate tax
donor’s tax
members
estate planning
sources
outline
Capital Gains Tax 4,500,000.00 4,500,000.00
Transfer Tax (max of 0.5%) 375,000.00 375,000.00

Property Registration Fee
(0.25%) 187,500.00 187,500.00
11,250,000.0
DST 0 1,125,000.00
incorporation of family assets
• Creation of a family
corporation, by transferring the
property and making his family
members as stockholders.
estate tax
donor’s tax
members
estate planning
sources
outline
ADVANTAGES:
1.Separate juridical personality
2. Limited liability of stockholders
3. Shares of stock are easier to
distribute to heirs
4. Reserves the management of
wealth within the family
- Delpher Trades vs. IAC (G.R.
No. L-69259; January 26, 1988)
NIRC TRAIN Law
estate tax
donor’s tax
members
estate planning
sources
outline
1. Corporate Tax
1. Corporate Tax
30%
30%
2. Capital Gains Tax for
2. Capital Gains Tax for
shares of stock not traded in
shares of stock not traded in
the stock exchange
the stock exchange
5% for gains not over P100K
15% of net gains
10% for gains over P100K
NIRC TRAIN Law
3 Raw Lands (P30M each) 90,000,000.00 90,000,000.00
Shares of Stock in Family Corporation
Shares of Stock 25,000,000.00 25,000,000.00
3 cars (5M x 3) 15,000,000.00 15,000,000.00
BPI account 50,000,000.00 50,000,000.00
Cash in vault 10,000,000.00 10,000,000.00
Family Home 100,000,000.00 100,000,000.00
gross estate 430,500,000.00 115,000,000.00 545,500,000.00 430,500,000.00 115,000,000.00 545,500,000.00
deductions:
family home 1,000,000.00 10,000,000.00
net estate 486,000,000.00 473,000,000.00
estate tax 96,415,000.00 28,380,000.00
NIRC TRAIN Law
3 Raw Lands (P30M each) - -
Shares of Stock in Family Corporation 9,000,000.00 9,000,000.00
Shares of Stock 25,000,000.00 25,000,000.00
3 cars (5M x 3) 15,000,000.00 15,000,000.00
BPI account 50,000,000.00 50,000,000.00
Cash in vault 10,000,000.00 10,000,000.00
Family Home 100,000,000.00 100,000,000.00
gross estate 349,500,000.00 115,000,000.00 464,500,000.00 349,500,000.00 115,000,000.00 464,500,000.00
deductions:
family home 1,000,000.00 10,000,000.00
net estate 405,000,000.00 392,000,000.00
estate tax 80,215,000.00 23,520,000.00
estate tax
donor’s tax
members
estate planning
sources
outline
NIRC TRAIN
3,000,000.0 3,000,000.0
Corporate Income Tax 0 0
trust
• involves the holding of an asset
of an owner by one person for
estate tax
donor’s tax
members
the benefit of another person
estate planning
sources
outline
or the owner himself.
• can either be testamentary or
inter vivos (living
trust/personal management
trust)
• personal management trust can
be revocable or irrevocable
TESTAMENTARY TRUST INTER VIVOS TRUST
Created using trust
Created inside the Will
agreement
Takes effect upon the death Takes effect upon signing the
of the testator trust agreement
estate tax
donor’s tax
members
estate planning
Execution after testator’s
sources
outline
Execution is immediate
death
Revocable Revocable or irrevocable
cannot be amended UNLESS

can be amended anytime
stated in the trust agreement
financial provision to
financial provisions will only
beneficiaries may start
start after grant of probate
without grant of probate
NIRC TRAIN Law
1. Estate Tax
1. Estate Tax
• Maximum of 20% of the trust
estate tax
donor’s tax
members
• 6% of the trust asset
estate planning
sources
asset
outline
2. Trust Fee
2. Trust Fee
• Usually 0.5% per annum
based on the market value of
Revocable based on the market value of
the asset managed or
Personal P10,000, whichever is higher
P10,000, whichever is higher
3. Income Tax
3. Income Tax
Management • 20% on net income of trust
• 20% on net income of trust
asset
Trust asset
• P40 when the amount does
not exceed P5,000
not exceed P5,000
• P20 on each succeeding
P5,000 or fractional part
NIRC TRAIN Law
1. Donor’s Tax
1. Donor’s Tax
• Maximum of 15% of the trust
estate tax
donor’s tax
members
• 6% of the trust asset
estate planning
sources
asset
outline
2. Trust Fee
2. Trust Fee
based on the market value of
Irrevocable based on the market value of
Personal P10,000, whichever is higher
P10,000, whichever is higher
3. Income Tax
3. Income Tax
Management • 20% on net income of trust
• 20% on net income of trust
asset
Trust asset
not exceed P5,000
not exceed P5,000
NIRC TRAIN Law
3 Raw Lands (P30M each) 90,000,000.00 90,000,000.00
Shares of Stock 25,000,000.00 25,000,000.00
3 cars (5M x 3) 15,000,000.00 15,000,000.00
BPI account 50,000,000.00 50,000,000.00
Cash in vault 10,000,000.00 10,000,000.00
Family Home 100,000,000.00 100,000,000.00
gross estate 430,500,000.00 115,000,000.00 545,500,000.00 430,500,000.00 115,000,000.00 545,500,000.00
deductions:
family home 1,000,000.00 10,000,000.00
net estate 486,000,000.00 473,000,000.00
estate tax 96,415,000.00 28,380,000.00
NIRC TRAIN Law
3 Raw Lands (P30M each) 90,000,000.00 90,000,000.00
Shares of Stock 25,000,000.00 25,000,000.00
3 cars (5M x 3) 15,000,000.00 15,000,000.00
BPI account 50,000,000.00 50,000,000.00
Cash in vault - -
Family Home 100,000,000.00 100,000,000.00
gross estate 420,500,000.00 115,000,000.00 535,500,000.00 420,500,000.00 115,000,000.00 535,500,000.00
deductions:
family home 1,000,000.00 10,000,000.00
net estate 476,000,000.00 463,000,000.00
estate tax 94,415,000.00 27,780,000.00
trust
NIRC TRAIN
estate tax
donor’s tax
members
estate planning
sources
outline
Donor's Tax 1,004,000.00 600,000.00
Income Tax 605,000.00 490,000.00
Documentary Stamp Tax 20,010.00 40,020.00

life insurance
a contract between an insurer and policyholder in which the insurer
guarantees payment of a death benefit to the named beneficiaries upon
estate tax
donor’s tax
members
the death of the insured
estate planning
sources
outline
ADVANTAGES:
1. Provides liquidity
2. may be used as capital to support widow/er and children
3. proceeds will not be subject to probate or court dealings
4. If the appointed beneficiary is designated as irrevocable, it is excluded from
the gross estate
NIRC TRAIN LAW
1. Estate Tax
• Maximum of 20% of policy value if 1. Estate Tax
the beneficiary designation in the • 6% of policy value if the beneficiary
policy is revocable designation in the policy is revocable
estate tax
2. Donor’s Tax 2. Donor’s Tax
donor’s tax
members
estate planning
sources
outline
• Maximum of 15% if the beneficiary • 6% if the beneficiary designation in
designation in the policy is the policy is irrevocable
irrevocable 3. Insurance charges
3. Insurance charges • Depending on the product, age of
• Depending on the product, age of insured
insured 4. Documentary Stamp Tax
4. Documentary Stamp Tax • Depends on the amount of insurance
• Depends on the amount of insurance • Exempt if amount does not exceed
• Exempt if amount does not exceed P100K
P100K • Maximum of P200 for insurance
• Maximum of P100 for insurance value exceeding P1 Million
value exceeding P1 Million
members
sources
estate planning
donor’s tax
estate tax
outline
3D - GROUP 2
ABUZO, Jan Michael C.
BONGABONG, Joshua James M.
CABRAL, Alyanna Angelina M.
estate tax
donor’s tax
members
estate planning
sources
outline
CERERA, Florence Diane N.
DELA CRUZ, Camille Victoria D.
GUMELA, Jimson Leandro V.
KIONG, Shaira Kasey L.
MANGAYA, Francis Luigi R.
MARQUEZ, Jones Harvey I.
PABLO, Jedia Jane M.
TORRES, Joanne Louis F.

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ESTATE & DONOR’S

revenue for the government

To provide for equal

as a partner in the accumulation of

It is the only method of collecting the

taxes...There is nothing in the Tax Code, and in the

Determination of the Value of the Estate:

1. For lands: Whichever is higher of the Fair

indebtedness in respect to, property

indebtedness in respect to, property

imposed, beyond what the statute expressly and clearly imports,

• Accrued as of the death of the decedent which

robbery, theft or embezzlement

2. Property on which vanishing deduction is being claimed must

get the vanishing deduction.

indebtedness in respect to, property

indebtedness in respect to, property

indebtedness in respect to, property

2. Add the value from Transfer for Public Use

3. Add Vanishing deduction

executor, administrator, or anyone of the heirs, as the

his or her gross estate.

❖ Property acquired during marriage by gratuitous title

(inheritance/donation) by either spouse, and fruits as well

❖ Property for personal and exclusive use of either spouse

❖ Property acquired BEFORE MARRIAGE of either spouse

❖ All properties owned by the spouse at the time of the

Note: Proceeds of Life Insurance on Decedent’s Life

❖ Allowable Deductions: Special deductions of Family

❖ Obligations contracted during the marriage, which

❖ Allowable Deductions (as to Decedent’s Exlusive

❖ Support for illegitimate children

❖ Liabilities incurred for the commission of a crime

Step 1 – Get the Net Conjugal Estate (NCE)

Step 2 – Get the Decedent’s Share (DS)

Step 3 – Get the Gross Estate of Decedent (GED)

Step 4 – Get the Net Estate (NE)

Step 2 - Get the Net Taxable

The following shall not be taxed:

(A) The merger of usufruct in the owner of the naked title;

amounts of any estate tax imposed by the authority of a foreign

(as provided below), the lower value shall be credited.

thousand pesos (P20,000), the executor, administrator

• Repealed by the TRAIN LAW!

Philippines, of that part of his gross estate situated in

(b) Itemized deductions from gross estate allowed in

(c) The amount of tax due whether paid or still due

an authorized agent bank, or

(AAB) of the Revenue District Office (RDO) where

• For non-resident decedent with no executor or

Period to pay the Estate Tax to the

Liable for penalty

TRAIN (RA 10963)

Time of 6th months One year

The extension shall not exceed 5 years if settled judicially or 2 years if

The running of the period of the Statute of Limitations on Assessments

The Commissioner or his duly authorized representative may require the

Cash Installment Basis

Willful neglect or 50% surcharge