Case Scenarios

I.
Mr. Juan de la Cruz, a resident citizen of the Philippines, died after two years
of undergoing medical treatment in the U.S., leaving behind his wife and 3
children a family home in Muntinlupa, a 15 hectare farm in Lipa, Batangas,
shares of stocks in Ayala Corporation and several joint accounts with his wife
in various banks in the Philippines. He also has a life insurance policy
designating therein his wife as the beneficiary.
(a) How would you determine the gross estate of Mr de la Cruz? What
assets as stated in the problem form part of his gross estate?
(b) What possible deductions (and their limits) may be claimed by the
estate of Mr. de la Cruz?
(c) Assuming that the family home was acquired by Mr. de la Cruz via
inheritance from his parents 3 years before his death, will this form
part of his gross estate?
(d) Assuming that 5 years before his death, Mr. de la Cruz executed a
Deed of Assignment of his shares of stock in Ayala Corporation in
favor of his eldest son to take effect immediately upon death of Mr. de
la Cruz, will the value of the shares of stock donated still form part of
the Gross Estate of Mr. de la Cruz? Why?
(e) What possible steps could have been taken in order to minimize the
estate taxes of Mr. dela Cruz?
(f) When shall the notice of death and the estate tax return be filed and
the estate tax due paid?

II.
Paul is the only child of John and Yoko. John died in December 1998 while his
wife Yoko died in May 2014. The couple left no asset except a 300 sq.m.
property in Laguna which was used as a family home. At the time of Johns
death, the BIR zonal value of the house was Php 2,000/sq.m. (Php 600,000)
and with a tax declaration value (house and lot) of Php 250,000. When Yoko
died in 2014, the BIR zonal value was Php 10,000/sq. m. (3,000,000) while the
tax declaration value (house and lot) became Php 3,500,000 since it is now
locatedcommercial building.
Four months before the death of his mother, Paul spent Php 2,000,000 for
medical expenses and spent another Php 1,000,000 for funeral and interment
expenses. In order to recover on his expenses, Paul wants to sell the property
to a buyer.
(a) Can Paul legally transfer the property to his buyer? What needs to be
done?
(b) Based on the facts presented, compute the required estate tax/es due to
be paid before Paul can legally transfer the property to the buyer using
below formula.
Gross Estate
Less: Allowable Deductions
Net Estate
Less: Share of spouse in conjugal property
Taxable Net Estate