Valencia, Reginald G.

August 22 2020

 ACC C301-302A Assignment

Introduction to Transfer Taxes-Video Reaction

Paper

This is a reaction paper with regards to a video of Mr. Gerard Carpizo on

updates on Estate Taxes and TRAIN Law. The video started with the definition of Estate
tax.
Bureau of Internal Revenue defines estate tax as “tax on the right of the deceased
person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of
death and on certain transfers, which are made by law as equivalent to testamentary
disposition. It is not a tax on property. It is a tax imposed on the privilege of transmitting
property upon the death of the owner. The Estate Tax is based on the laws in force at
the time of death notwithstanding the postponement of the actual possession or
enjoyment of the estate by the beneficiary.”
Estate tax is not a tax on the property itself but rather a tax on the privilege to transfer
properties from the deceased person to his or her beneficiaries. Succession 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 or
others either by his will or by operation of law.
After the death of the Decedent, estate tax already accrues.
In computing estate tax, there shall be an imposed rate of six percent (6%) based on
the value of such NET ESTATE determined as of the time of death of decedent
composed of all properties, real or personal, tangible or intangible less allowable
deductions. Before you arrive at net estate you should first, consolidate all the assets of
the decedent whether real or personal, tangible or intangible. Resident citizen’s gross
estate includes all assets in the Philippines and abroad, while nonresident aliens assets
in the Philippines is the only assets subject to estate tax. Allowable deductions are
deducted from the gross estate to arrive at net estate.
Mr. Carpizo notes that if the gross estate of the decedent amounts to more than five
million, then it should be certified by a certified public accountant.
Allowable deductions updates under the TRAIN, Funeral Expenses are no longer
deductible. However, for deaths prior to the effectivity of the TRAIN, funeral expenses
are still allowable deductions. If the gross estate qualifies on the requirements, an
amount equivalent to the current fair market value of the decedent's family home not
exceeding ten million pesos (P10,000,000) (P1,000,000 prior to the TRAIN). Another
updates under TRAIN is a deduction in the amount of P5,000,000 (P1,000,000 prior to
the TRAIN) shall be allowed without need of substantiation. The full amount of
P5,000,000 shall be allowed as a deduction for the benefit of the decedent.