MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY

DEPARTMENT OF ACCOUNTANCY

ACCTG163: REVIEW IN TAXATION

ESTATE TAXATION

TRAIN LAW

ALLOWABLE DEDUCTIONS

A. Expenses, losses, CITIZENS OR NON-RESIDENT ALIEN:

indebtedness, taxes, etc. (ELIT) RESIDENTS

I. Claims against the estate Yes Yes

II. Claims against insolvent

person
Yes Yes
III. Unpaid Mortgages
Yes Yes
IV. Taxes
Yes Yes
V. Casualty losses
Yes Yes

B. Transfer for public use Yes Yes

C. Vanishing deduction Yes Yes

D. Family home Yes No

E. Standard deduction Yes Yes

F. Amounts received under RA Yes No

4917

G. Share of the surviving Yes Yes

spouse

1. Deductions Allowed to the Estate of a Citizen or a Resident.

A. Standard Deduction - an amount equivalent to P5,000,000.

B. Family Home - an amount equivalent to the current fair market value of the decedents
family home: Provided, however, that if the said current fair market value exceeds
P10,000,000, the excess shall be subjected to estate tax.

C. Funeral expenses, judicial expenses and medical expenses are no longer allowed as
deductions.

2. Deductions Allowed to Nonresident Not a Citizen

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 MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY

DEPARTMENT OF ACCOUNTANCY

ACCTG163: REVIEW IN TAXATION

A. Standard deduction - An amount equivalent to P500,000;

B. That proportion of the deduction known as claims against the estate; claims against
insolvent persons; unpaid mortgage, indebtedness and taxes, which value of such part bears
to the value of his gross estate wherever situated.

C. Property previously taxed (Vanishing deductions)

D. Transfer for Public Use

TAX ADMNISTRATION

1. Rate of the Estate Tax - there shall be levied, assessed and collected and paid upon the
transfer of the net estate of every decedent, whether resident or nonresident of the Philippines
a tax at the rate of six percent (6%) based on the value of such net estate.

2. Requirements - 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 registrable
property, such as real property motor vehicle, shares of stock, or other similar property for
which a clearance from the BIR is required as a condition precedent for the transfer of
ownership thereof in the name if the transferee, the executor, or the administrator, or any of
the legal heirs, as the case may be, shall file a return under oath in duplicate.

The estate tax returns showing a gross value exceeding P5,000,000 shall be supported with a
statement duly certified by a Certified Public Accountant.

Notice of death is no longer required.

3. Time for filing - the estate tax return shall be filed within one year from the decedent’s death

4. Payment by Installment - in the case the available cash of the estate is insufficient to pay the
total estate tax due, payment by installment shall be allowed within two years from the
statutory date for its payment without civil penalty and interest.

If the bank has knowledge of the death of a person, who maintained a bank deposit alone, or
jointly with another, it shall allow any withdrawal from the said deposit account subject to a final

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 MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY

DEPARTMENT OF ACCOUNTANCY

ACCTG163: REVIEW IN TAXATION

withholding tax of 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.

EXERCISE 1: Determine the amount to be included in the gross estate, decedent’s interest
and Family home deduction.

1. Family home is conjugal property, P13,000,000

2. Family home is conjugal property, P22,000,000

3. Family home is exclusive property, P11,200,000

4. Family home is exclusive property, P8,000,000

5. Family land is exclusive, P5,000,000, and family house is conjugal, P8,000,000.