Estate Tax PDF

## Estate Tax ### 5. Transfers for insufficient consideration - Not a bona fide sale for adequate and full consideration in money or money's worth (sale of property at substantially below its fair market value (FMV)) **AMOUNT INCLUDED IN GROSS ESTATE:** - FMV at the time of death - Less: Selling Price - Excess of FMV over SP (Included in Gross Estate) ### 6. Proceeds from Life Insurance On insurance under policies taken out by the decedent upon his own life. The following are included in the gross estate! - Whether designated as REVOCABLE or IRREVOCABLE when the beneficiary is the: - Estate of the deceased - His executor; or - Administrator - When the beneficiary is a third person (other those mentioned in letter "a") and the designation is REVOCABLE. ### 2. Exemptions and Exclusions from Gross Estate #### a. Under Section 85 and 104 of the Tax Code, as amended - Capital or exclusive property of the surviving spouse [Sec. 85(H)] - Properties outside the Philippines of a non-resident alien decedent (Sec. 104) - Intangible personal property in the Philippines of a non-resident alien when the rule of Reciprocity applies (Sec. 104) #### b. Under Section 87 of the Tax Code, as amended - The merger of the usufruct (right to use) in the owner of the naked title. - The transmission from the first heir, legatee or donee in favor of another beneficiary in accordance with the will of the predecessor. This type of transfer is most commonly known as "transfer under Special Power of Appointment (SPA)". - GPA vs SPA: - GPA = inclusion to the gross estate - SPA = exclusion from the gross estate - The transmission or delivery of the inheritance or legacy of the fiduciary heir or legatee to the fedeicomissary. - This is the same with SPA above. The only difference is, in fideicomissary transfer, the relationship of the donor and donee is only one degree apart (i.e., from a Parent to his/her son) - All bequests, devices, legacies or transfers to social welfare, cultural and charitable institutions, provided: - No part of the net income of said institutions inure to the benefit of any individual; - Not more than 30% of such transfers shall be used for administration purposes. #### c. Under Special Laws - Proceeds of life insurance and benefits received by members of the GSIS (RA728). - Benefits received by members from the SSS by reason of death (RA1792). - Amounts received from Philippine and United States governments for war damages. - Amounts received from United States Veterans Administration. - Benefits received from the Philippines and US government for damages suffered during World War II (RA227). - Retirement benefits of officials/employees of a private firm (RA4917). - Payments from the Philippines of US government to the legal heirs of deceased of World War II Veterans and deceased civilian for supplies/services furnished to the US and Philippine Army (RA136) - Proceeds of life insurance under a group insurance taken out by employer (not taken out upon his life) - Transfers by way of bona fide sales - Transfer of property to the National government or to any of its political subdivisions. - Personal Equity and Retirement Account (PERA) assets of the decedent-contributor (RA No. 9505) - Compensation paid to private and public health workers who contracted Covid-19 (in case of death) under RA 11494, also known as BAYANIHAN ACT II. ### The Composition of the Estate Tax may be summarized as follows: Decedent | Gross Estate ---------- | ------------- Citizen or Resident alien | Property (Real or Personal) property wherever situated Intangible personal property wherever situated Nonresident alien | Real property situated in the Philippines Tangible personal property situated in the Philippines Intangible personal property with situs in the Philippines, unless excluded on the basis of reciprocity as described below. ### RECIPROCITY CLAUSE - No tax shall be imposed with respect to intangible personal properties of a non-resident alien (NRA) decedent situated in the Philippines: - When the foreign country, where such NRA is a resident and citizen, does not impose transfer tax with respect to intangible personal properties of Filipino citizens not residing in that country; or - When the foreign country imposes transfer taxes, but grants similar exemption with respect to intangible personal properties of Filipino citizens not residing in that country. ### Valuation of Gross Estate - In General - fair market value upon death. - Personal Properties - Fair market value - Real Property - the higher amount between: - Fair Market Value - Zonal Value ### Shares of stock - Traded in the Local Stock Exchange (LSE) - mean value between the highest and lowest quotations nearest the date of death if none is available on the date of death itself. - Not traded in the local stock exchange: - Common (ordinary) shares - Book value - Preferred (preference) shares - Par Value ### Usufruct - Based on latest Basic Mortality Table to be approved by the Secretary of Finance, upon recommendation of the Insurance Commissioner. ### Property Relationship between Spouses - Article 74 of the Family Code provides that the property relationship between husband and wife shall be governed in the following order: - By the provisions of this Code (Family Code); and - By marriage settlements executed before the marriage; - By the local customs #### 1. Based on Agreement - If there was an agreement entered into by the parties before marriage, apply the type of settlement entered into by the parties such as: - Absolute Community of Property (ACOP) - Conjugal Partnership of Gains (CPG) - Complete Separation #### 2. By Operations of Law (Family Code) - In the absence of an agreement, the marriage settlement will depend on the date of marriage as provided under the law (Family Code) as follows: - Date: Before the effectivity of the NFC (Aug. 3, 1988), apply CPG - Date: On or after the effectivity of the NFC (Aug. 3, 1988), apply ACOP #### 3. By Customs or Traditions #### Conjugal Partnership of Gains (CPG) - Exclusive Properties: - That which is brought to the marriage as his or her own (properties before marriage) - That which each acquires during marriage by gratuitous title; - That which is acquired by right of redemption, by barter or by exchange with property belonging to any one of the spouses; and - That which is purchased with exclusive money of the wife or of the husband. - Conjugal Properties: - Those acquired by onerous title during marriage at the expense of the common fund, whether the acquisition be for the partnership, or for only one of the spouses; - Those obtained from labor, industry, work or profession of either or both spouses; - The FRUITS (or income), natural or industrial, or civil, due or received during marriage from common property, as well as the net fruits from the exclusive property of each spouse; - Rule on Fruits under CPG: "AFC - ALL Fruits (or income) are Common." - The share of either spouse in the hidden treasure which the law awards to the finder or owner of the property where the treasure is found; - Those acquired through occupation such as fishing or hunting; - Livestock existing upon dissolution of the partnership in excess of the number of each kind brought to the marriage by either spouse; and - Those acquired by chance, such as winnings from gambling or betting. However, losses there from shall be borne exclusively by the loser-spouse. #### Absolute Community of Property (ACOP) - Community Properties: - All properties owned by the spouses at the time of celebration of the marriage (properties before marriage); or - Acquired thereafter, unless proven otherwise, as well as the fruits or income thereof. - Rule on Fruits. "FFS - The Fruit (or income) will Follow the Source." - Exclusive Properties: - Property acquired during marriage by gratuitous title by spouse, as well as the fruits or income thereof. - EXCEPTION: IF it is expressly provided by the donor, testator or grantor that they shall form part of the community property. - Rule on Fruits: "FFS - The Fruit (or income) will Follow the Source" - Property for personal and exclusive use of either spouse. - EXCEPTION: jewelry shall form part of the community property. - Property acquired before the marriage by either spouse who has legitimate descendants by the former marriage, and the fruits as well as the income, if any of such property ### Summary: Property | ACOP | CPG ------- | -------- | -------- Properties acquired before marriage | Common | Exclusive Properties acquired during marriage From exclusive property | Exclusive | Exclusive From common property| Common | Common Those obtained from labor, industry, work or profession of either or both spouses From Gratuitous Transfer (inheritance or donation) | Common | Common CPG | Exclusive | ACOP | Exclusive | FRUITS or income on properties | Common | Common Property for personal and exclusive use of either spouse In General except JEWELRY under ACOP only | Ex or E | Common Exclusive | Property acquired before the marriage by either spouse who has legitimate descendants by a former marriage, and the fruits as well as the income, if any, of such property (under ACOP) | Common | Exclusive ### Allowable Deductions Defined Deductions are items which the law on estate tax allows, as amended, to be subtracted from the value of the gross estate in order to arrive at the net taxable estate. As a rule, deductions from gross estate are presumed to be common deductions unless specifically identified as exclusive. ### Ordinary Deductions - classified as exclusive or common deduction. #### 1. LOSSESS, INDEBTEDNESS, TAXES, etc. (LITe) ##### Casualty Losses - Requisites: - Incurred during the settlement of the estate. Settlement period is the period allowed by law to file and pay the estate tax as follows: - Decedent died before 2018 - within six months (6) after death - Decedent died on or after Jan. 1, 2018 - within one (1) year after death - Arising from fires, storms, shipwreck, or other casualties, or from robbery, theft or embezzlement; - Not compensated by insurance; - Not claimed as deduction for income tax purposes; - Incurred not later than the last day for the payment of the estate tax. - Amount deductible - the amount deductible is the value of the property lost.. ##### Indebtedness or Claims Against the Estate - Requisites: - Personal debt of the decedent existing at the time of his death; - Contracted in good faith; - Must be valid in law and enforceable in court; - Must not have been condoned by the creditors; - Must not have prescribed; - Substantiation Requirements: - In Case of Simple Loans including Advances - A Duly Notarized Certification from the Creditor as to the unpaid balance of the debt including interest as the date of death. The Sworn Certification shall be signed by: - CREDITOR - If Creditor is a Corporation - The President or Vice-President or Other Principal Office of the Corporation - If Creditor is a Partnership - Any of the general partners - If Creditor is a Bank/Financial Institution - Branch manager of the Bank or Financial Institution which monitors and manages the loan of the decedent-debtor - IF SAID LOAN IS CONTRACTED WITHIN THREE (3) YEARS prior to the death of the decedent: A Statement under Oath executed by the administrator or executor of the estate reflecting the disposition of the proceeds of the loan. - If the unpaid obligation arose from Purchase of Goods or Services: - Pertinent documents evidencing the purchase of goods or service, such as sales invoice, delivery receipts, official receipts. - In any of the cases above, the one who should certify must not be a relative of the borrower within the fourth civil degree, either by consanguinity or affinity. - AMOUNT DEDUCTIBLE - the amount of debt that will qualify in the above requirements. ##### Unpaid Mortgage - Requisites: - The fair market value of the mortgaged property undiminished by the mortgage indebtedness should be included in the gross estate; - Contracted in good faith; and - For an adequate and full consideration. - Amount Deductible - amount of unpaid mortgage. ##### Unpaid Taxes - Requisite - the tax must have accrued before the death of the decedent. - AMOUNT DEDUCTIBLE - unpaid taxes that accrued before the decedent's death but not including (Sec. 6.4.2 of RR 12-2018): - Any income tax upon income received after death; - Property taxes not accrued before death; and - Estate tax from the transmission of his estate. ##### Claims Against Insolvent Persons - Requisites: - Value of the claims is included in the gross estate; and - The insolvency of the debtor must be established. - Amount deductible - the amount of claims/receivable that cannot be collected. #### 2. TRANSFER FOR PUBLIC USE (TFPU) - Requisites: - Given to the Government of the Philippines (National or local); - Must be testamentary in character; or - By way of donation mortis causa executed by the decedent before his death; - Exclusively for public purpose. - AMOUNT DEDUCTIBLE - amount of all bequests, legacies, devises, or transfers to or for the use of the Government of the Philippines, or any of its political subdivisions. #### 3. VANISHING DEDUCTION (PROPERTY PREVIOUSLY TAXED) - Requisites: - The decedent died within 5 years from receipt of the property from a prior decedent OR donor; - The property is located in the Philippines - The property must have formed part of the taxable estate of the prior decedent or the taxable gift of the donor and the transfer tax (estate tax or donor's tax, as the case may be) relative thereto had been paid; - The property on which vanishing deduction is being taken must be identified as the one received from the prior decedent, or from the donor, or something acquired in exchange therefore; - No vanishing deduction on the property was allowable to the estate of the prior decedent. - AMOUNT DEDUCTIBLE (PROFORMA COMPUTATION): - Value to take (lower between FMV at the time death vs. FMV at the time of inheritance or donation) - Less: Mortgage paid by present decedent (on mortgaged assumed) - Initial Basis (IB) - Less: Proportional Deduction [(IB/GE) x (LITe + TFPU)] - Final Basis - Rate - VANISHING DEDUCTION - RATE OF VANISHING DEDUCTION: - Interval of Acquisition (inheritance or donation) and death of present decedent | RATE - Within 1 year | 100% - More than 1 year but not more than 2 years | 80% - More than 2 years but not more than 3 years | 60% - More than 3 years but not more than 4 years | 40% - More than 4 years but not more than 5 years | 20% ### Special Deductions #### SUMMARY: Decedent | Standard Deduction | Family Home | Purely exclusive | Purely common | Mixed (exclusive and common) | Benefits under RA 4917 ------- | -------- | -------- | -------- | -------- | -------- | -------- Citizen/Resident decedent|P5,000,000 | FMV but not to exceed P10M | FMV but not to exceed P10M | FMV/2 but not to exceed P10M| Add the properties applying the preceding rules but the total amount shall not exceed P10M| Amount of death benefit NRA decedent|P500,000 | Not allowed | Not allowed | Not allowed | Not allowed | Not allowed - **Standard Deduction** - The amount deductible without any required substantiation is P5,000,000 if the decedent died on or after January 1, 2018. A standard deduction of P500,000 shall also be allowed to nonresident alien decedent beginning January 1, 2018. - **Family Home Allowance** - REQUISITES: - The decedent is married or head of a family; - The family home must be the actual residential home of the decedent and his family at the time of his death, as certified by the Brgy. Captain of the locality the family home is situated; - It is located in the Philippines; - The value of the family home is included in the gross estate - **AMOUNT DEDUCTIBLE - The LOWER between the Actual Interest and the Limi**: - Purely Exclusive = 100% FMV - Purely Common Property = 100%FMV/2 - MIXED: - Exclusive Property (100%) - Add: Common Property (100%/2) - Total - **Amount Received by heirs under R.A. 4917** - REQUISITES - Include such amount in the gross estate. - Amount Deductible - amount received by the heirs from the decedent's employer as a consequence of the death of the decedent-employee. - **SHARE OF THE SURVIVING SPOUSE** - Applicable only to married decedents. - Amount Deductible: - Common Properties - Less: Common Deductions - Net Common Properties before special deductions - Multiply by: 50% - Share of the Surviving Spouse - **TAX CREDIT FOR ESTATE TAX PAID TO A FOREIGN COUNTRY** - **WHO CAN CLAIM?** - Only resident or citizen decedents can claim tax credit. - **AMOUNT DEDUCTIBLE:** - The LOWER between the Actual estate tax paid abroad and the Limit. - **LIMIT:** - It Depends on how many foreign country is involved. - IF Only one foreign country is involved - Net estate, foreign x Philippine estate tax - Net estate, world - IF More than one foreign countries are involved. The limit is the lower between Limit 1 and Limit 2 computed as follows: - LIMIT 1 or A (Per Foreign Country where there was estate tax paid): - Net estate, per foreign x Philippine estate tax - Net estate, world - LIMIT 2 or B (Total of ALL foreign countries involved): - Net estate, all foreign countries x Philippine estate tax - Net estate, world ### ESTATE TAX RETURN - (Section 90 of the Tax Code, as amended) - **When Required?** - In all cases subject to estate tax; - Regardless of the amount of the gross estate, where it consists of registered or registrable property such as real property, motor vehicle, shares of stock, or other similar property for which a "Certificate Authorizing Registration (CAR)" from the BIR is required as a condition precedent for the transfer of ownership thereof in the name of the transferee, the administrator, or the executor, or any of the legal heirs, as the case may be, shall file a return under oath. - **CPA Certification is required if the gross estate exceeds P5,000,000 if the decedent died on or after January 1, 2018** - CPA Certification shall contain certification as to: - Composition of the Gross Estate - The allowable deductions claimed - The estate tax due - **Who shall file the Estate Tax Return?** - Executor/administrator (primary obligation); or - Any of the legal heirs (secondary obligation) - **Date of Filing:** - TRAIN Law - Within one (1) year after death - **EXTENSION:** - The Commissioner or his/her duly authorized representative, shall have the authority to grant, in meritorious cases, a reasonable extension, not exceeding thirty (30) days, for filing the return. - NOTE: The provision of the Tax Code [Sec. 90(C)) authorizing the Commissioner of Internal Revenue to grant, under meritorious cases, a reasonable extension not exceeding thirty (30) days for filing the return, was NOT REPEALED by the TRAIN Law. - **Place of Filing:** - In case of a resident decedent - Authorized agent bank; or - 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. - In case of a non-resident decedent - Revenue District Office where the executor or administrator is registered - Revenue District Office having jurisdiction over the executor or administrator's legal residence (if executor or administrator is not registered). - Office of the BIR Commissioner (RDO No. 39 - South Quezon City) if the estate does not have an executor or administrator in the Philippines. - **Payment of Estate Tax:** - Estate tax shall be paid at the time the return is filed (Pay as you File) - When the Commissioner finds that the payment of the estate tax or of any part thereof would impose undue hardship upon the estate or any of the heirs, he may extend the time for payment as follows: - Estate is settled extrajudicially (extra-judicial settlement) - 2 years - Estate is settled judicially (judicial settlement) - 5 years - The application for extension shall be filed with the RDO) where the estate is required to secure its TIN and file the estate tax return. This application shall be approved by the CIR or his duly authorized representative. Where the request for extension is by reason of negligence, intentional disregard of rules and regulations, or fraud, no extension shall be granted. If an extension is granted, the CIR may require the executor, or administrator, or beneficiary, as the case may be, to furnish a bond in such amount, not exceeding double the amount of the tax and with such sureties as the Commissioner deems necessary, conditioned upon the payment of the said tax in accordance with the terms of the extension. - Estate tax shall be paid at the time the return is filed (Pay as you File) - **INSUFFICIENCY OF CASH FOR THE PAYMENT OF ESTATE TAX** - In case of insufficiency of cash for the immediate payment of the total estate tax due, the estate may be allowed to pay the estate tax due through the following options, including corresponding terms and conditions (RR 12-2018): - Cash Installment; - The cash installments shall be made within two (2) years from the date of the filing of the estate tax return; - The frequency (i.e., monthly, quarterly, semi-annually, annually) deadline and the amount of each installment shall be indicated in the estate tax return, subject to the approval by the BIR; - In case of lapse of two (2) years without the payment of entire tax due, the remaining balance thereof shall be due and demandable subject to applicable penalties and interest reckoned from the prescribed deadline for filing the return and payment of estate tax; and - No civil penalties or interest may be imposed on the estates permitted to pay the estate tax due by installment. - Partial disposition of estate and application of its proceeds to the estate tax due. - The disposition, for purposes of this option, shall refer to the conveyance of property, whether real, personal or intangible property, with the equivalent cash consideration; - The written request for the partial disposition of estate shall be filed, together with a notarized undertaking that the proceeds thereof shall be exclusively used for the payment of the total estate tax due; - The computed estate tax due shall be allocated in proportion to the value of each property. - An electronic Certificate Authorizing Registration (eCAR) shall be issued upon presentation of the proof of payment of the proportionate estate tax due of the property intended to be disposed. Accordingly, eCARS shall be issued as many as there are properties to be disposed to cover the total estate tax due, net of the proportionate estate tax(es) previously paid under this option; and - In case of failure to pay the total estate tax due out from the proceeds of the said disposition, the estate tax due shall be immediately due and demandable subject to the applicable penalties and interest reckoned from the prescribed deadline for filing the return and payment of the estate tax, without prejudice of withholding the issuance of eCARS on the remaining properties until the payment of the remaining balance of the estate tax due, including the penalties and interest. - **Discharge of Executor or Administrator from Personal Liability** - (Section 92 of the Tax Code, as amended) - If the executor or administrator makes a written application to the Commissioner for determination of the amount of the estate tax and discharge from personal liability therefore, the Commissioner (as soon as possible, and in any event within one (1) year after the making of such application, or if the application is made before the return is filed, then within one (1) year after the return is filed, but not after the expiration of the period prescribed for the assessment of the tax in Section 203 shall not notify the executor or administrator of the amount of the tax. The executor or administrator, upon payment of the amount of which he is notified, shall be discharged from personal liability for any deficiency in the tax thereafter found to be due and shall be entitled to a receipt or writing showing such discharge. - **Payment before Delivery by Executor or Administrator** - (Section 94 of the Tax Code, as amended) - No judge shall authorize the executor or judicial administrator to deliver a distributive share to any party interested in the estate unless a certification from the Commissioner that the estate tax has been paid is shown. - **Duties of Certain Officers and Persons** - There shall not be transferred to any new owner in the books of any corporation, sociedad anonima, partnership, business, or industry organized or 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 (thru issuance of eCAR) or his duly authorize representative that the taxes have been paid is shown (Section 97 of the Tax Code, as amended). - No judge shall authorize the executor or judicial administrator to deliver a distributive share to any party interested in the estate, unless a certification from the Bureau of Internal Revenue (BIR) that the estate tax has been paid is shown (Section 94 of the Tax Code, as amended). - Register of Deeds shall not register in the registry of property any transfer of real property or real rights therein, or any mortgage, by way of donation mortis causa of inheritance, without a certification from the BIR of payment of estate tax, and they shall immediately notify the BIR of non-payment of tax discovered by them (Section 95 of the Tax Code, as amended). - IF BANK HAS KNOWLEDGE OF THE DEATH OF A PERSON WHO MAINTAINED A JOINT ACCOUNT, - **UNDER THE 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 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. In all cases, the final tax withheld shall not be refunded, or credited on the tax due, on the net taxable estate of the decedent (Section 97 of the Tax Code, as amended). - In instances where the deposit accounts have been duly included in the gross estate of the decedent and the estate tax due thereon paid, the executor, administrator, or any of the legal heirs shall present the eCAR issued for the said estate prior to withdrawing from the bank deposit account. Such withdrawal shall no longer be subject to the 6% withholding tax by the bank. - Any lawyer, notary public or any government officer who, by reason of his official duties, intervenes in the preparation or acknowledgment of documents regarding partition or disposal of donations inter vivos or mortis causa, legacy or inheritance shall furnish the BIR with copies of such documents and any information whatsoever which may facilitate the collection of the estate tax. - A debtor shall not pay his debts to the heirs, legatees, executor or administrator of his creditor-decedent without a certification from BIR that the estate tax has been paid, but he may pay the executor or judicial administrator without such certification if the credit is included in the inventory of the estate of the decedent. ### Transfer Taxes - Which of the following statements is false? Transfer tax is - Imposed upon gratuitous transfer of property - Of two kinds: estate tax and donors' tax - Classified as national tax - None of the above **Answer: D** - Statement 1: Gratuitous transfer or donation is subject to transfer tax. - Statement 2: A donation which takes effect at the time of death of the donor is a donation mortis causa subject to estate tax while a donation which takes effect during the lifetime of both the donor and the donee is a donation inter-vivos subject to donor's tax. **Answer: C** - The tax imposed on the right to transmit property at death is known as: - Donor's tax - Estate tax - Business tax - Income tax **Answer: B** - The tax imposed on the transfer of property without consideration between two or more persons who are living at the time the transfer is made. - Donor's tax - Estate tax - Business tax - Income tax **Answer: A** - S1: A sale is a form of transfer transaction that requires payment of transfer tax. - S2: Transfer tax accrues at the time of transfer of the decedent's property or rights to the heir. **Answer: D** - Transfer tax is applicable only to gratuitous transfers - A "sale", in general, is an onerous transfer, hence, not subject to transfer tax. - Transfer tax accrues from the effectivity of the gratuitous transfer (upon death in case of mortis causa donation and upon perfection of the donation in case of donation inter-vivos). - Statement 1: The rights to the succession are transmitted from the moment of death of the decedent, notwithstanding the postponement of the actual possession or enjoyment of the estate by the beneficiary. - Statement 2: The heirs succeed immediately to all the property of the deceased ancestor at the moment of death as completely as if the ancestor had executed and delivered to them a deed for the same before his death. **Answer: C** - Mortis causa transfer of property is effected: - When the property is received by the heir. - When the court awarded the ownership of property to a particular heir. - Upon the death of the decedent. - Upon payment of estate tax. **Answer: C** - The subject matter or object of transfer taxes is - Right to transmit - Decedent - Properties of the decedent - Beneficiaries **Answer: A** - Estate tax is - A property tax because it is imposed on the property transmitted by the decedent to his heirs. - An indirect tax because the burden of paying the tax is shifted on the executor or any of the heirs of the decedent - An excise tax because the object of which is the shifting of economic benefits and enjoyment of property from the dead to the living - A poll tax because it is also imposed on residents of the Philippines whether Filipino citizens or not **Answer: C** - Which of the following is incorrect? - Estate tax is an excise tax. It is a tax on the right to transfer property at death and on certain transfers which are made by law the equivalent of testamentary disposition. - Excise tax is an ad valorem tax. It is assessed based on the net value of the estate transferred. - Upon effectivity of the TRAIN Law, estate tax is a proportional tax. It is no longer based on a graduated tax rate but to a fixed rate of 6% on the net taxable estate of a decedent. - Estate tax is a specific tax. **Answer: D** - Justification for the imposition of transfer tax. - Redistribution of wealth theory - Benefit received theory - State partnership theory - All of the above **Answer: D** - Inheritance received is construed as unequal distribution of wealth resulting to the imposition of estate tax describes: - Redistribution of wealth theory - benefit-received theory - state partnership theory - ability to pay theory **Answer: A** - Which among the following statements is correct? - Estate taxation is governed by the statute in force at the time of death of the decedent. - Estate tax accrues as of 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. - All of the above **Answer: D** - The taxpayer in estate tax is: - The decedent - The estate as a juridical entity - The heirs or succession - The administrator or executor **Answer: B** - Who has the personal liability to pay estate tax? - The decedent - The estate as a juridical entity - The heirs or successors - The administrator or executor **Answer: D** - Estate tax accrues from: - The moment of death of the decedent - The moment the notice of death is filed - The moment the estate tax return is filed - The moment the properties are delivered to the heirs **Answer: A** - It is a well settled rule that estate taxation is governed by the statute in force at the time of: - Creation of the last will testament or death of the decedent in case of intestate succession - Death of the decedent - Filing of estate tax return - Either letter "b" or "c" whichever will result to higher estate tax liability **Answer: B** - It is a mode of acquisition by virtue of which, the property, rights and obligations, to the extent of the value of the inheritance, of a person are transmitted through his death to another either by his will or by operation of law. - Succession - Donation - Prescription - Exchanges **Answer: A** - Statement 1: Decedent is the general term applied to the person whose property is transmitted through succession, whether or not he left a will. - Statement 2: An heir is a person called to succession either by provision of a will or by operation of law. **Answer: C** - Which statement is false about succession: - The successor inherits all the transmissible property of a decedent including his liabilities. - The successor can be made liable for the obligations of the decedent beyond the value of the asset he received. - In succession, fruits and credits maturing after the death of the decedent pass to the heirs even if they were not subjected to estate tax. - In succession, the successor can refuse the inheritance. **Answer: B** - An act whereby a person is permitted, with the formalities prescribed by law, to control to a certain degree the disposition of his estate, to take effect after his death. - Contract - Trust - Will - Legacy **Answer: C** - is a written will which must be entirely written, dated and signed by the hand of the testator himself. It subject to no other form and it may be made in or out of the Philippines and need not be witnessed. - Ordinary will 1- Notarial will - Holographic will - Codicil **Answer: C** - Statement 1: The making of a will is strictly a personal act. It cannot be left in whole or in part of the discretion of a third person, or accomplished through the instrumentality of an agent or attorney. - Statement 2: The burden of proof that the testator was not of sound mind at the time of making his dispositions is on the person who opposes the probate of the will; but if the testator, one month, or less, before making his will was publicly known to be insane, the person who maintains the validity of the will must prove that the testator made it during a lucid interval. **Answer: C** - The persons prohibited by law to make a will are: - Those below 18 years of age. - Those who are not of sound mind at the time of its execution. **Answer: C** - The following are the elements of succession,

Document Details

Tags

Related

Summary

Full Transcript

Upgrade to continue