Podcast
Questions and Answers
Which of the following properties will be included in the gross estate of the decedent under a general power of appointment?
Which of the following properties will be included in the gross estate of the decedent under a general power of appointment?
- Only properties owned directly by the decedent
- Properties subject to general power of appointment (correct)
- Properties that have no beneficiaries
- Only real properties
What should be reported as part of the gross estate on BIR Form 1801?
What should be reported as part of the gross estate on BIR Form 1801?
- Only real properties
- Only personal properties and business interests
- Family interests
- Real properties, family home, personal properties, and business interest (correct)
How should unlisted common shares be valued for the gross estate?
How should unlisted common shares be valued for the gross estate?
- At the price set by the stock exchange
- At historical acquisition cost
- At fair market price
- At their book value (correct)
What is the valuation method for the value of usufruct or annuity?
What is the valuation method for the value of usufruct or annuity?
What value should newly purchased property be recorded at when reporting gross estate?
What value should newly purchased property be recorded at when reporting gross estate?
For properties that have no fixed valuation rules under the law, what is the primary consideration in determining their value?
For properties that have no fixed valuation rules under the law, what is the primary consideration in determining their value?
What is the preferred method for valuing listed shares in the stock exchange for the gross estate?
What is the preferred method for valuing listed shares in the stock exchange for the gross estate?
What should not be included in the valuation of gross estate properties?
What should not be included in the valuation of gross estate properties?
What properties are included in the gross estate of a resident citizen at the point of death?
What properties are included in the gross estate of a resident citizen at the point of death?
For a non-resident alien (NRA) with reciprocity, which types of properties are included in the gross estate within the country?
For a non-resident alien (NRA) with reciprocity, which types of properties are included in the gross estate within the country?
Which of the following is NOT considered an exempt transfer?
Which of the following is NOT considered an exempt transfer?
What is the first procedure in establishing gross estate?
What is the first procedure in establishing gross estate?
Which type of property is exempted from the gross estate for an NRA abroad?
Which type of property is exempted from the gross estate for an NRA abroad?
What is subtracted from the inventory of properties when calculating gross estate?
What is subtracted from the inventory of properties when calculating gross estate?
Which of the following is considered a taxable transfer?
Which of the following is considered a taxable transfer?
Which property would NOT be considered in the gross estate of a resident at the point of death?
Which property would NOT be considered in the gross estate of a resident at the point of death?
What must be withheld by a bank upon withdrawal from a decedent’s account within one year after their death?
What must be withheld by a bank upon withdrawal from a decedent’s account within one year after their death?
Which of the following properties are exempt from estate tax if proven to be acquired using exempt benefits?
Which of the following properties are exempt from estate tax if proven to be acquired using exempt benefits?
Which condition is necessary for a donation to be excluded from estate tax under the conditional exclusion?
Which condition is necessary for a donation to be excluded from estate tax under the conditional exclusion?
What type of transfer includes properties where the decedent retained possession until death?
What type of transfer includes properties where the decedent retained possession until death?
What is the definition of transfers in contemplation of death?
What is the definition of transfers in contemplation of death?
Which type of transfers involves possession given during the lifetime but not ownership?
Which type of transfers involves possession given during the lifetime but not ownership?
What is true about amounts subjected to the 6% final tax?
What is true about amounts subjected to the 6% final tax?
Which of the following is NOT considered a taxable transfer?
Which of the following is NOT considered a taxable transfer?
What happens to the proceeds of an irrevocable life insurance policy upon the decedent's death?
What happens to the proceeds of an irrevocable life insurance policy upon the decedent's death?
Which of the following is excluded from the gross estate?
Which of the following is excluded from the gross estate?
What type of transactions are considered onerous and not subject to estate tax?
What type of transactions are considered onerous and not subject to estate tax?
Which of the following may be included in the gross estate if the beneficiary is designated revocably?
Which of the following may be included in the gross estate if the beneficiary is designated revocably?
What is true regarding the separate properties of a surviving spouse?
What is true regarding the separate properties of a surviving spouse?
Which of the following benefits are excluded from estate taxes?
Which of the following benefits are excluded from estate taxes?
What percentage of bequests to charitable institutions can be used for administrative purposes?
What percentage of bequests to charitable institutions can be used for administrative purposes?
Which of the following is a characteristic of a bonafide sale?
Which of the following is a characteristic of a bonafide sale?
Study Notes
Gross Estate Composition
- Includes all decedent's properties (tangible/intangible, real/personal) at death, regardless of location.
- Summary: Real, tangible personal, and intangible personal properties are included in the gross estate for residents/citizens (both within and abroad). For non-resident aliens (NRAs), inclusion depends on reciprocity and location.
Exempt Transfers (Excluded from Gross Estate)
- Properties not owned by the decedent at death.
- Legally excluded properties owned by the decedent but exempt by law from estate tax.
- Proceeds of irrevocable life insurance policies payable to beneficiaries other than the estate, executor, or administrator.
- Proceeds of group insurance, GSIS policies, SSS accruals, USVA benefits, and war damage payments.
- Bequests to social welfare, cultural, and charitable institutions (up to 70% for administration).
- Acquisitions/transfers explicitly declared non-taxable by law.
- Bank deposits withdrawn from the decedent's account during estate settlement (subject to 6% withholding tax if withdrawn within one year of death).
- Properties acquired using exempt benefits (GSIS, SSS, USVA, group insurance, war damage payments). Heirs/administrators must prove acquisition using these funds.
Taxable Transfers (Included in Gross Estate)
- Transfers in contemplation of death (motivated by impending death).
- Revocable transfers (transfers of possession, not ownership, during the decedent's lifetime).
- Property passing under a general power of appointment (allowing the holder to control the property as their own).
- Transfers with retention of rights (decedent retains possession, enjoyment, or income from transferred property).
Determining Gross Estate
- Inventory: List properties at the time of death.
- Adjustments: Subtract exempt transfers and add taxable transfers.
- Formula: Inventory of properties - Exempt Transfers + Taxable Transfers = Gross Estate.
Valuation of Gross Estate
- Fair market value at death: Generally accepted accounting principles (GAAP) guide valuation where specific rules don't exist.
- Real Properties: Higher of CIR's zonal value or the provincial/city assessor's value.
- Shares of Stocks:
- Preferred shares: Par value.
- Unlisted common shares: Book value.
- Listed shares: Arithmetic mean of highest and lowest stock exchange quotations nearest the death date.
- Usufruct and Annuities: Calculated based on the beneficiary's probable life expectancy using a standard mortality table.
- Other Properties: Valued according to GAAP unless otherwise specified.
- Additional Valuation Guidelines:
- Newly purchased property: Purchase price.
- Used properties: Second-hand value.
- Pawned properties: Grossed-up pawn value adjusted by the loan-to-value ratio.
- Properties fixed in monetary terms: Value specified in the contract, including accrued income.
Presentation of Gross Estate in Estate Tax Return (BIR Form 1801)
- Real properties.
- Family home.
- Personal properties.
- Business interests.
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Description
This quiz explores the concept of gross estate composition, detailing various types of properties included in the decedent's estate at death. Additionally, it examines exemptions and transfers that are legally excluded from the gross estate, such as certain insurance proceeds and charitable bequests. Test your understanding of estate tax regulations and exemptions.
