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Tax2 L02 Notes
Tax2 L02 Notes
Tax2 L02 Notes
Gross Estate
1. Estate Tax
a. tax imposed on the privilege that a person is given in controlling, to a certain
extent, the disposition of his property to take effect upon death
b. excise tax imposed on the act of passing the ownership of property at the time
of death and NOT on the value of the property or right
c. transfer mortis causa
d. accrues instantly at the time of death
i. its accrual is different from the obligation to pay it
5. Intangible assets with situs within the Philippines (Section 104 of the Tax Code)
a. Franchise which must be exercised in the PH
b. Shares, obligations, or bonds issued by any corporation or sociedad anonima
organized or constituted in the Philippines in accordance with its laws
c. Shares, obligations, or bonds issues by any foreign corporation, 85% of the
business of which is located in the PH
d. Shares, obligations, or bonds issued by any foreign corporation if such shares,
obligations, or bonds have acquired a business situs in the PH
e. Shares or rights in any partnership, business or industry established in the PH
7. Reciprocity clause
a. Definition
i. The Tax Code excludes intangible personal property (Shares, Intangible
assets, Receivables, and Bank Deposits) with situs in the PH from the
gross estate of an NRA decedent if there is reciprocity
b. Indicators of reciprocity
i. The decedent at the time of his death was a resident citizen of a foreign
country which at the time of his death did not impose an estate tax of
any character in respect of intangible personal property of PH citizens
not residing in that foreign country; OR
ii. The laws of the foreign country of which the decedent was a resident
citizen at the time of his death allow a similar exemption from estate
taxes of every character, in respect of intangible personal property
owned by citizens of the PH not residing in that foreign country
b. Real Property
ZONAL VALUE vs
ASSESSED VALUE
whichever is HIGHER
For real property improvement
Construction cost FMV per
latest
per building permit vs tax
declaration
c. Personal Property
FMV @ time of
death
d. Shares of stock
i. Unlisted Common Shares
Book Value/share
ii. Unlisted Preference Shares
Par value of
shares
iii. Listed Shares
highest quotation
lowest quotation No .of shares
FMV = at date of death+ at date of death x owned
2
!!!: if none is available at the date of death, use the quotations at the
b. Decedent’s interest
Extent of equity or ownership participation of the decedent on any
property physically existing and present in the gross estate, whether or
not in his possession, control, or dominion
Also refers to the value of any interest in property owned by the
decedent at the time of his death (interest having value or capable of
being valued or transferred)
o Example:
Dividends declared before death of decedent but received
after death
Partnership profit which have accrued before decedent’s
death
Usufructuary and rights
FMV @ Consideration
Value = time of death — received
11.Tax rate
6%
Sdsefrd