Deductions from

Gross Estate
Allen Jonas Jaca, CPA, MBA
Objectives
● Determine the deductions from the gross estate, computation of net taxable estate
both for single and married decedent.
● Define the concept of gross estate deductions.
● Differentiate ordinary from special deductions (Share of Surviving Spouse, Family
Home and Amounts allowed under RA 4917)
● Analyze fully the concept and Vanishing deductions.
● Define and illustrate the computation of net taxable estate of a single decedent.
● Define and illustrate the computation of the net taxable estate of a married
decedent.
● Differentiate the three regimes of property separations (Conjugal Partnership of
Gains, Absolute Community of Properties and Complete Property Separation)
● Prepare the estate tax return, discuss the deadline for the payment of estate tax and
the legal implications for its non-payment.
 Deductions from Gross Estate
● The law allows certain items to be deducted from the
value of the Gross Estate to arrive at the decedent’s net
estate, which eventually becomes the taxable estate
subject to estate tax.
● Accordingly, deductions from gross estate can be classified
into: (1) ordinary deductions; (2) special deductions; and
(3) share of the surviving spouse (for married decedents)
 Summary of Deductions from Gross Estate
Citizen and Resident Decedents Nonresident Alien Decedents
(RC, NRC, RA) (NRAETB, NRANETB)
I. ORDINARY DEDUCTIONS
1. Expense (LITE) 1. Proportional Deductions for losses, indebtedness,
a. Losses taxes, claims against insolvent persons (LITE)
b. Indebtedness / Claims against the estate
c. Taxes 𝐺𝑟𝑜𝑠𝑠 𝐸𝑠𝑡𝑎𝑡𝑒, 𝑃ℎ𝑖𝑙𝑖𝑝𝑝𝑖𝑛𝑒𝑠
𝑋 𝐿𝐼𝑇𝐸 𝑤𝑜𝑟𝑙𝑑
d. Claims against insolvent persons 𝐺𝑟𝑜𝑠𝑠 𝐸𝑠𝑡𝑎𝑡𝑒, 𝑊𝑜𝑟𝑙𝑑
2. Transfer for Public Use
3. Vanishing Deduction 2. Transfer for Public Use
3. Vanishing Deduction
II. SPECIAL DEDUCTIONS
1. Standard deduction – P5,000,000 1. Standard deduction – P500,000
2. Family home – maximum of P10,000,00
3. RA No. 4917 (Retirement benefits of employees)

III. NET SHARE OF THE SURVIVING SPOUSE

For a married decedent For a married decedent

 Ordinary
Deductions
 1A. Losses
● For purposes of estate taxation, deductible losses from
the gross estate shall pertain to “casualty losses”.
● These include storms, shipwreck or other casualties, or
losses from robbery, theft or embezzlement.
● The amount deductible is the value of the property lost.
 1A. Losses
● The following are the requisites for losses to be deductible:
1. Arising exclusively from:
o Acts of God (e.g. fire, storm, shipwreck and other
similar casualty)
o Acts if man such as robbery, theft or embezzlement
2. Not compensated by insurance or otherwise
3. Not claimed as a deduction in an ITR of the estate subject to
income tax
4. Incurred during the settlement of the estate
 1A. Losses
● Settlement period pertains to the period prescribed by law
to file and pay the estate tax, which is, under TRAIN:
○ 1 year from the date of death; or

○ The extension to file thereof which shall not be more

than 30 days after the lapse of the 1 year period.
● Losses incurred beyond the abovementioned period are NOT
allowed to be deductible from the gross estate.
 1A. Losses (Example)
Among the properties include in the gross estate of the decedent
at the time of his death was a newly developed resort in Siargao
valued at P20M. George is the sole heir to the property. During the
settlement of the estate and before the last day of the filing of the
estate tax return, a super typhoon hit Siargao destroying entirely
the newly developed resort. It was determined that the fair value
of the property after the incident was reduced to P500,000.
 1A. Losses (Example)
Analysis:
● P20M shall be the value included as part of the decedent’s gross
estate. The said amount is the FMV of the property at the time of
death.
● P19.5M shall be the amount included as part of the allowable
deductions from the gross estate. The amount is the difference
on the FMV of the property lost.
● Assuming the property was insured, no amount shall be allowed
as deductible from the gross estate since the loss was fully
compensated by insurance.
 1A. Losses (Example)
Analysis:
● Assuming the incident happened beyond the settlement period of
1 year and the property is NOT insured, no amount shall be
allowed as deductible from the gross estate since only losses
incurred during the settlement period shall be allowed as
deduction from gross estate.
● Assuming the incident happened 1 day BEFORE the death of the
decedent, no amount shall be allowed either (1) as part of the
gross estate or (2) as deductible from the gross estate since the
law speaks of losses incurred during the settlement of the estate,
which presupposes that there is already death.
 1B. Indebtedness / Claims Against the Estate
● “Claims” is generally construed to mean debts or
demands of a pecuniary nature, which could have been
enforced against the deceased in his/her lifetime and
could have been reduced to simple money judgments.
● The liability represents personal obligation of the
deceased existing at the time of his/her death, which
must be contracted in good faith during his/her lifetime
for adequate and full consideration in money or
money’s worth.
 1B. Indebtedness / Claims Against the Estate
● Accordingly, claims against the estate may arise out of the following sources:
(1) Contract; (2) Tort; or (3) Operation of Law.
● The following are the requisites for deductibility of indebtedness/claims
against the estate:
1. The liability represents personal obligation of the deceased existing at
the time of his/her death.
2. The liability was contracted in good faith and for adequate and full
consideration in money or money’s worth.
3. The liability must be a debt or claim which is valid in law and
enforceable in court.
4. The indebtedness must not have been condoned by the creditor or the
action to collect from the decedent must not have been prescribed.
5. The indebtedness must be substantiated by proper documents.
 1B. Indebtedness / Claims Against the Estate
● The New Civil Code provides the following rules on prescription:
Article 1142. A mortgage action prescribes after ten years.
Article 1144. The following actions must be brought within ten years from the
time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
Article 1145. The following actions must be commenced within six years:
(1) Upon an oral contract;
(2) Upon a quasi-contract. (n)
Article 1146. The following actions must be instituted within four years:
(1) Upon an injury to the rights of the plaintiff;
(2) Upon a quasi-delict;
 1B. Indebtedness / Claims Against the Estate
● This deduction also includes unpaid mortgages or indebtedness on
property.
● These are deductions allowed when a decedent leaves a property
encumbered by a mortgage or indebtedness contracted in good
faith and adequate and full consideration.
● To be allowed as a deduction, the gross estate of the decedent
must include the FMV of the property encumbered.
● Accordingly, the amount allowed as a deduction would be the
outstanding debt or mortgage.
 1B. Indebtedness / Claims Against the Estate
● In case unpaid mortgage payable is being claimed by the estate,
verification must be made as to who was the beneficiary of the loan
proceeds.
○ If the loan is found to be merely an accommodation loan (i.e. loan
proceeds went to another person), the value of the unpaid loan
must be included as receivable of the estate.
○ However, if there is a legal impediment to recognize the same as
receivable of the estate, said unpaid obligation/mortgage payable
shall not be allowed as a deduction from the gross estate.
● But in all instances, the mortgaged property, to the extent of the
decedent’s interest therein, should always form part of the gross
estate.
 1B. Indebtedness / Claims Against the Estate (Example)
Case A: A resident decedent left the following upon his death:
Cash in Bank (Various peso accounts) 8,000,000
Cash in Bank (Various FCDU accounts) 9,600,000
Real properties, Philippines 10,000,000
Real properties, Abroad 10,000,000
The real properties located in the Philippines and other countries were
mortgaged for P8,000,000.
Determine the:
(1) Gross estate of the decedent – P37,600,000
(2) Deductions for unpaid mortgages – P8,000,000
 1B. Indebtedness / Claims Against the Estate (Example)
Case B: Pedro died in 2020. The following claims against Pedro’s estate were
claimed by his heirs as deductions from his gross estate:
Notes payable (Notarized) 500,000
Notes payable (Not notarized) 200,000
Unpaid property taxes before his death 300,000
Unpaid property taxes after his death 100,000
Unpaid judicial expenses 80,000
Unpaid funeral expenses 75,000
Unpaid mortgage on his properties before death 50,000
Debts from gambling losses questioned by
50,000
decedent while still alive
 1B. Indebtedness / Claims Against the Estate (Example)
The amount of deduction as ”claims against the estate” is
computed as follows:

Notes payable (Notarized) 500,000

Unpaid property taxes before his death 300,000
Unpaid mortgage on his properties
50,000
before death
Claims against the estate 850,000
 1B. Indebtedness / Claims Against the Estate (Example)
Analysis:
1. Unpaid funeral and judicial expenses are NOT classified as “claims against
the estate” as these have different classifications. However, upon
effectivity of the TRAIN Law, funeral, judicial and medical expenses are no
longer deductible from the gross estate.
2. Claims against the estate should pertain only to valid claims as of the date
of death. Claims arising after the death are NOT allowed as deduction
from gross estate.
3. Receivables and gambling (also called “wagering gains”) before death are
inclusions from the decedent’s gross estate; however, wagering or
gabling losses are NOT allowed as deductions from the gross estate
(remember the 3rd requisite for deductibility of claims against the estate,
i.e. VALID)
 1C. Taxes
● These are unpaid taxes that accrued prior to the death
of the decedent.
● However, the following taxes are NOT allowed as
deductions from the gross estate:
1. Income tax on income received after death.
2. Property taxes accrued after death.
3. Estate tax.
 1C. Taxes (Examples)
Which among the following should be allowed as deduction from the Gross Estate of a
Filipino decedent who died on March 31, 2020?
No. Description of Tax Allowed as Deduction?
Unpaid donor’s tax on donation made during the
1 Yes
previous year
2 Unpaid donor’s tax on donations made during the year Yes
3 Unpaid income tax on decedent’s income for 2019 Yes
Unpaid income tax on decedent’s income from January
4 Yes
to March 2020
Unpaid income tax attributable to the estate’s income
5 No
from April to December 31, 2020
6 Unpaid business tax for taxable year 2019 Yes
 1C. Taxes (Examples)
Which among the following should be allowed as deduction from the Gross Estate of a
Filipino decedent who died on March 31, 2020?
No. Description of Tax Allowed as Deduction?
7 Unpaid business tax from January to March 2020 Yes
Unpaid business tax on the decedent’s estate from April
8 No
to December 31, 2020
9 Unpaid municipal taxes from January to March 2020 Yes
Unpaid municipal taxes on the decedent’s estate from
10 No
April to December 31, 2020
Unpaid import duties on importations made from
11 Yes
January to March 2020
12 Tax assessments/deficiencies prior to death Yes
 1D. Other Deductions
● These include claims against insolvent persons, which
are receivables due or owing from persons who are not
financially capable of meeting their obligations.
● Hence, these are claims by the decedent during his/her
lifetime that cannot be collected.
● An insolvent person is one whose properties are not
sufficient to satisfy, whether fully or partially, his/her
debts. (i.e. Liabilities > Assets)
 1D. Other Deductions
● The following are the requisites for deductibility:
1. The incapacity of the debtor to pay his/her obligation should be
proven.
2. The full amount owed by the insolvent must first be included in
the decedent’s gross estate and the amount uncollectible shall
be allowed as a deduction.
3. If the insolvent could only pay partial amount, the full amount
owed shall be included in the gross estate, and the amount
uncollectible shall be allowed as a deduction.
NOTE: For purposes of estate taxation, a judicial declaration of
insolvency is NOT required.
 1D. Other Deductions (Example)
Case A: Juan is indebted to Pedro P1,000,000. For the past 10 years, the
credit standing, and reputation of Juan is outstanding. However, during 2018,
the relationship of Juan and Pedro was tainted by a personal disagreement.
Consequently, Pedro was unable to collect the amount of P1,000,000 due
from Juan. Juan intentionally ignored several collection/demand letters from
Pedro. In 2019, Pedro died.
Analysis:
● The P1,000,000 is a valid and enforceable claim of Pedro as of the date of
his death. Hence, the P1,000,000 collectible from Juan should be included
in the gross estate of Pedro.
● However, the P1,000,000 uncollectible claim is NOT allowed as deduction
from Pedro’s gross estate. This is because only uncollectible claims against
insolvent persons are deductible. In this case, Juan is NOT insolvent.
 1D. Other Deductions (Example)
Case B: Assume the same data in Case A, except that during 2019, Juan
experienced financial difficulty and his assets are no longer sufficient to
settle his liabilities. Consequently, Juan was only to pay P500,000 to
Pedro in 2019. In the same year, Juan asked a competent court for a
judicial declaration that he is insolvent. The court is yet to decide on
Juan’s petition. In 2020, Pedro died.
Analysis:
● The remaining P500,000 should be included in the gross estate of
Pedro.
● The remaining P500,000 is allowed as a deduction from Pedro’s gross
estate. The judicial declaration of insolvency is not required to
consider a person insolvent. It is sufficient that the person’s insolvency
is proven.
 1D. Other Deductions (Example)
Case C: Pedro died in 2020. At the time of his death, he has collectible
sum of P1,000,000 from a debtor who was subsequently declared by a
court as insolvent for having total liabilities of P4,000,000 against his total
properties valued at P800,000 only.
Analysis:
● The P1,000,000 amount shall be included in the gross estate of Pedro.
● Also, the estate of Pedro may claim P800,000 deduction from the
gross estate computed as follows:
Amount of claim 1,000,000
Less: Collectible (P800K/P4M x P1M) 200,000
Uncollectible portion 800,000
 B. Transfer for Public Use
● Disposition in a last will and testament or transfers to take effect after
the death in favor of the government of the Philippines or any political
subdivision thereof (e.g. barangay, province, city/municipality) for
exclusively public purposes.
● Before a transfer for public use is allowed as a deduction from the
gross estate, same amount shall be included first in the computation
of the gross estate.
● Pursuant to RA No. 10072, all donations, legacies and gifts made in
favor of the Philippine Red Cross (PRC) to support its purposes and
objectives shall be exempt from donor’s tax and shall be deductible
from the gross income of the donor for income tax purposes or from
the computation of the donor-decedent’s net estate as a transfer for
public use for estate tax purposes.
 C. Vanishing Deduction
● Also referred to as a deduction for “property previously
taxed” or PPT.
● It is an amount allowed to reduce the taxable estate of
a decedent where the property received by him/her
from a prior decedent or donor (1) by gift or (2) by
bequest, device or inheritance has been the object of
previous transfer taxation.
● Hence, vanishing deduction is allowed as a deduction
from the gross estate to minimize the effect of or as a
remedy against double taxation.
 C. Vanishing Deduction

Prior decedent

Present
decedent Property

Donor
 C. Vanishing Deduction
● The following are the requisites for the deductibility of vanishing
deduction:
1. Death – the present decedent died within 5 years from the (a) date
of the death of the prior decedent or (b) date of gift.
2. Identity of the property – the property with respect to which
deduction is sought can be identified as the one received from the
prior decedent or from the donor or as the property acquired in
exchange for the original property so received.
3. Location – the property which vanishing deduction is being claimed
must be located in the Philippines.
4. Inclusion of the property – the property must have formed part of
the gross estate of the prior decedent or the gross gifts of the donor
made within five years prior to the death of the present decedent.
 C. Vanishing Deduction
● The following are the requisites for the deductibility of vanishing
deduction:
5. Previous taxation of the property – the estate tax on the prior
taxation or the donor’s tax on the gift must have been finally
determined and paid by the prior decedent or by the donor, as the
case may be.
6. No previous vanishing deduction on the property – no such
deduction on the subject property was allowed in determining the
value of the net estate of the prior decedent.
 C. Vanishing Deduction
● The percentage of vanishing deduction depends on the
interval between:
○ The death of the present decedent and the death of

the prior decedent, if the property previously taxed

(PPT) was acquired by inheritance; or
○ The death of the present decedent and the date of

the gift, if the PPT was acquired by donation.

 C. Vanishing Deduction
● If the interval is:
Percentage of Vanishing Deductions
Percentage Allowable as
More than Not more than
Vanishing Deduction
- 1 year 100%
1 year 2 years 80%
2 years 3 years 60%
3 years 4 years 40%
4 years 5 years 20%
5 years - 0%
 C. Vanishing Deduction (Steps)
1st Step: Determine the value to be taken of the PPT

● This step is accomplished by choosing the LOWER

amount between:
○ FMV of the PPT in the estate of the PRIOR decedent,

or FMV of the PPT at the date of donation;

○ FMV of the PPT in the estate of the PRESENT

decedent
 C. Vanishing Deduction (Steps)
2nd Step: Deduct any mortgage or lien on the PPT which
was paid by the PRESENT decedent, where such
mortgage/lien was used as a deduction in the computation
of the estate tax of the PRIOR decedent, or as a deduction
in determining the donor’s tax.

3rd Step: Get the difference between the amounts in the

1st step and 2nd step. You will get the so-called “initial
basis”
 C. Vanishing Deduction (Steps)
4th Step: Pro-rate the ordinary deductions (excluding the
vanishing deduction) and subtract from the initial basis.

The pro-rating of the ordinary deductions is done using the

formula below:

𝑰𝒏𝒊𝒕𝒊𝒂𝒍 𝑩𝒂𝒔𝒊𝒔
𝑿 𝑶𝒓𝒅𝒊𝒏𝒂𝒓𝒚 𝑫𝒆𝒅𝒖𝒄𝒕𝒊𝒐𝒏𝒔 (𝑬𝑿𝑪𝑳𝑼𝑫𝑰𝑵𝑮 𝒗𝒂𝒏𝒊𝒔𝒉𝒊𝒏𝒈 𝒅𝒆𝒅𝒖𝒄𝒕𝒊𝒐𝒏𝒔)
𝑮𝒓𝒐𝒔𝒔 𝑬𝒔𝒕𝒂𝒕𝒆
 C. Vanishing Deduction (Steps)
5th Step: Get the difference between the amounts in the
3rd step (i.e. the initial basis) and 4th step (i.e. pro-rated
ordinary deductions). You will get the so-called “final basis”.

6th step: Multiply the amount in the 5th step (i.e. the final
basis) by the percentage of vanishing deduction (see Table
in slide 35).

7th step: ”Congratulations!” is in order J

 C. Vanishing Deduction (Pro-Forma Formula)

Value to be taken
1st Step (LOWER amount between (a) the FMV of the PPT from the donor/prior decedent and
(b) FMV of the PPT in the gross estate of the PRESENT decedent) XXXX
2nd Step Less: Mortgage PAID by the PRESENT decedent XXXX

3rd Step Initial Basis XXXX

4th Step Less: Pro-Rated Ordinary Deductions XXXX

5th Step Final Basis XXXX

6th Step Multiply by: Vanishing Deduction Rate XX%

7th Step Amount of Allowable Vanishing Deduction XXXX

 C. Vanishing Deduction (Example)
Mrs. Santos, a citizen of the Philippines, died in 2019 leaving a property worth
P1,000,000 which she inherited 4 ½ years ago from her father. The property’s
FMV at the time of the father’s death was P800K. An unpaid mortgage of
P100,000 was assumed by Mrs. Santos which remained unpaid at the time of
her death. Other properties in Mrs. Santos’ Gross Estate has an FMV of
P3,000,000.
Assuming that the total amount of allowable deductions is P400,000,what
percentage will be used in computing the vanishing deduction and how much
will be the vanishing deduction?
A. 40% at P288K
B. 60% at P432K
C. 20% at 144K
D. 20% at 126K
 C. Vanishing Deduction (Example)

Value to be taken
(LOWER amount between (a) the FMV of the PPT from the donor/prior decedent
1st Step and (b) FMV of the PPT in the gross estate of the PRESENT decedent) 800,000

2nd Step Less: Mortgage PAID by the PRESENT decedent 0

3rd Step Initial Basis 800,000

4th Step Less: Pro-Rated Ordinary Deductions ([800,000/4,000,000] x 400,000) 80,000

5th Step Final Basis 720,000

6th Step Multiply by: Vanishing Deduction Rate (more than 4 years but less than 5 years) 20%

7th Step Amount of Allowable Vanishing Deduction 144,000

 Special
Deductions
 1. Standard Deduction
● The law allows a standard deduction without qualification, condition nor
requisite whatsoever.
● This amount shall be allowed as an additional deduction without need of
substantiation.
● The full amount shall be allowed as deduction for the benefit of the
decedent.
● The allowable standard deduction under the TRAIN Law are the following:
a. If the decedent is a citizen or a resident – P5,000,000
b. If the decedent is a nonresident alien – P500,000
Note: This is the only special deduction allowed to a nonresident alien
decedent. The other special deductions (i.e. family home and RA No. 4917) can
only be claimed by citizen and resident decedent.
 2. Family Home
● The amount of family home allowable as a deduction would
be the LOWER amount between:
○ P10,000,000; and

○ The FMV at the time of the decedent’s death of the

family home and the land on which it stands.
● The family home is deemed constituted on the house and lot
from the time it is actually occupied as a family residence
and is considered as such for as long as any beneficiaries
ACTUALLY resides therein (Family Code).
 2. Family Home
● Actual occupancy of the house or house and lot as the family
residence shall not be considered interrupted or abandoned in
such cases as the temporary absence from the constituted family
home due to travel, studies or work abroad.
● Hence, the family home is generally characterized by permanency,
i.e. the place to which, whenever absent for business or pleasure,
one still intends to return.
● The family home must be part of the properties of the absolute
community or the conjugal partnership, or of the exclusive
properties of either spouse, depending upon the classification of
the property and the property relations prevailing between the
husband and wife.
 2. Family Home
● Moreover, a family home is not only limited to married couples; it may
also be constituted by an unmarried head of a family on his/her own
property.
● Unmarried head of a family pertains to an unmarried man/woman with
(1a) One or both parent, (1b) one or more brothers or sisters (1c) one or
more legitimate, recognized, natural or legally adopted children living
with and dependent upon him/her for their chief support, where such
brothers/sisters/children are not more than 21 years of age, unmarried
and not gainfully employed, or where such children/brothers/sisters,
regardless of age, are incapable of self-support because of mental or
physical defect, or any of the beneficiaries mentioned in Article 154 of the
Family Code who is living in the family home and dependent upon the
head of the family for legal support.
 2. Family Home
● Accordingly, the beneficiaries of a family home are:
○ The husband and wife, or the head of a family; and

○ Their parents, ascendants, descendants including legally

adopted children, brothers and sisters, whether the
relationship be legitimate or illegitimate, who are living
in the family home and who depend upon the head of
the family for legal support.
● Limitation: The law provides that for purposes of availing the
family home deduction, a person/decedent may constitute
only one family home.
 2. Family Home
The following are the requisites for the deductibility of family home:
1. The decedent was married or if single, he/she was a head of the
family.
2. Along with the decedent, any of the beneficiaries mentioned must be
dwelling in the family home.
3. The family home, as well as the land on which it stands, must be
owned by the decedent. Therefore, the FMV of the family home
should have been included in the computation of the decdent’s
gross estate.
 2. Family Home
The following are the requisites for the deductibility of family home:
4. The family home must be the actual residential home of the
decedent and his/her family at the time of his/her death, as certified
by the Barangay Captain of the locality where the family home is
situated.
5. The total value of the family home must be included as part of the
gross estate of the decedent.
6. Allowable deduction must be in an amount equivalent to the current
FMV of the family home as declared or included in the gross estate,
or the extent of the decedent’s interest (whether conjugal,
community or exclusive) whichever is lower, but NOT exceeding
P10,000,000.
 2. Family Home (Example)
Determine the allowable deduction for Family Home (FH) in the following
independent cases:

CASE A: FH valued at P15,000,000. Decedent was single.

Answer: P0. The decedent was neither married nor head of the
family (HOF)

CASE B: FH valued at P15,000,000. Decedent was HOF.

Answer: P10,000,000. The limit provided by law for FH deduction
is up to the maximum amount of P10,000,000 only.
 2. Family Home (Example)
Determine the allowable deduction for Family Home (FH) in the following
independent cases:

CASE C: FH valued at P5,000,000. Decedent was HOF.

Answer: P5,000,000

CASE D: FH valued at P15,000,000. FH was exclusively owned by the

decedent. Decedent was married.
Answer: P10,000,000. The limit provided by law for FH deduction
is up to the maximum amount of P10,000,000 only.
 2. Family Home (Example)
Determine the allowable deduction for Family Home (FH) in the following
independent cases:

CASE E: FH valued at P15,000,000. FH was a conjugal property (i.e. owned

by both the decedent and his/her surviving souse). Decedent is married.
Answer: P7,500,000. For married decedents, the FMV of the FH
should be divided by two if the same is conjugal or community
property.
 2. Family Home (Example)
Determine the allowable deduction for Family Home (FH) in the following
independent cases:

CASE F: FH valued at P15,000,000 of which, P10,000,000 is allocated to the

land (exclusive) and P5,000,000 to the house (conjugal). Decedent is
married.
Answer: P10,000,000. Computed as follows:
Family lot (Exclusive) 10,000,000
Family home (Conjugal; divided by 2) 2,500,000
Total 12,500,000
However, take note that the maximum allowable
deduction for FH is only P10,000,000.
 2. Family Home (Example)
Determine the allowable deduction for Family Home (FH) in the following
independent cases:

CASE G: The FMV of the family home which is partly exclusive and partly
common are. As follows:
Family lot (Exclusive) 5,000,000
Family home (Common) 9,000,000
Answer: P9,500,000. Computed as follows:
Family lot (Exclusive) 5,000,000
Family home (Common; divided by 2) 4,500,000
Total 9,500,000
 3. Amounts Received by Heirs under RA No. 4917
● Any amount received by heir/s from the decedent’s employer
as a consequence of the death of the decedent-employee in
accordance with RA No. 4917 (An Act Providing that
Retirement Benefits of Employees of Private Firms Shall Not
be Subject to Attachment, Levy, Execution or Any Tax
Whatsoever).
● Provided that the amounts received is included as part of
the gross estate of the decedent.
Net Share of the
Surviving Spouse
With discussions on Property Relations
 Net Share of the Surviving Spouse
● The amount deductible is the net share of the surviving
SPOUSE in the conjugal partnership property.
● The net share is equivalent to 1/2 or 50% of the
conjugal property after deducting the obligations
chargeable (i.e. ordinary deductions only) to such
property.
● The share of the surviving spouse must be removed to
ensure that only the decedent’s interest in the estate is
taxed.
 Property Relations
● Pre-nuptial agreements are no longer new nowadays.
● It is relatively easy to enter into these agreements in the
Philippines as registration of such agreements are not
required.
● However, as security for the properties which may be
effected by the agreement and in order to bind third
parties, Philippine laws requires the recording of the
pre-nuptial agreement in the Local Civil Registry where
the marriage is celebrated AND at the Register of Deeds
of the province where the affected property is located.
 Property Relations
● Accordingly, pre-nuptial agreement must be:
1. In writing;
2. Executed prior to the celebration of the marriage;
3. Signed by future spouses.
● Any modification or amendment thereto may only be allowed
before the celebration of the marriage.
● The system of property relationship is applicable only to
married persons. It is used to distinguish a conjugal or
community property from an exclusive property.
 Property Relations
● Article 74 of the Family Code, as amended, provides that the property
relationship between husband and wife shall be governed in the following
order:
1. By marriage settlements executed before the marriage
2. By the provisions of law
3. By the local custom
● Accordingly, future spouses may, in their marriage settlements, agree
upon the following systems of property relationship:
a. Absolute Community of Property (ACP);
b. Conjugal Partnership of Gains (CPG);
c. Complete separation or property; or
d. Any other regime
 Property Relations
● However, in case of default or absence of an agreement as to
the property relations, the rule to be followed is:

Date of Marriage Property Relationship

Conjugal Partnership of
Before August 3, 1988
Gains (CPG)
Absolute Community of
On or after August 3, 1988
Property (ACP)
 Property Relations
● Any modifications in the marriage settlements must be made
before the celebration of the marriage.
● As such, the marriage settlements and any modifications
thereto shall be:
1. In writing;
2. Signed by the parties;
3. Executed before the celebration of the marriage;
4. Not prejudice third persons unless they are registered in the
local civil registry where the marriage contract is recorded
and in the proper registries of properties where they are
located.
Property Relations: Connection with Estate Tax
● If decedent was married and he/she has a surviving spouse, the
property in the gross estate need to be classified into: (1)
Conjugal/Common properties; and (2) Exclusive Properties of the
decedent.
○ Conjugal property is owned by both spouses

○ Exclusive property is owned by either the husband or by the wife.

■ The exclusive property of the husband is known as the

“capital”; the exclusive property of the wife is known as
“paraphernal” property.
● The classification is to facilitate the computation of the ½ or 50%
share of the surviving spouse on the net conjugal property as well
as the net taxable estate of a married decedent.
 Property Relations: Governing Law
● Irrespective of the place of the celebration of marriage and their
residence, the provisions of the Family Code (EO No. 209) shall govern
the property relations between husband and wife whose marriage
was celebrated on or after August 3, 1988 (i.e. effectivity date of the
Family Code).
● The provisions of the New Civil Code shall govern the property
relations of husband and wife whose marriage was celebrated before
August 3, 1988.
● Take note that stipulations in the settlements or contracts in
consideration of a future marriage, including donations between
prospective spouses made therein, shall be rendered void if the
marriage does not take place. However, the stipulations that do not
depend upon the celebration of the marriage shall still be valid.
 ● If the spouses do not have a valid marriage
settlement, this system will govern the property
relations of the couple, and it is more in keeping
with Philippine custom and family unity.
● The provisions on co-ownership shall apply to
the ACP between the spouses.
Absolute Community
● This means that the spouses become co-owners
of Property (ACP) of all property (1) they bring into the marriage
and (2) those acquired by each or both of them
during the marriage (save for certain exceptions
expressly provided under the law).
● Actually, the rules on co-ownership applies in all
matters not provided in the Family Code.
 ACP: Property Acquired BEFORE the Marriage
● In general, properties owned by the spouses before or upon
celebration of marriage and brought into marriage becomes
part of the COMMUNITY PROPERTY. These include
properties inherited or received as donation before the
marriage.
○ The exception to the abovementioned rule are properties
acquired before marriage by either spouse who has
legitimate descendants by the former marriage and the
fruits/income related to such properties, if any. These
properties are considered EXCLUSIVE PROPERTY of the
owner-spouse.
 ACP: Property Acquired DURING the Marriage
● Properties acquired during the marriage will be presumed to belong to the community
(both spouses), unless it can be proven to be exclusive property.
● Property acquired during the marriage by onerous title through using the common fund
of the spouses or from income of either of them is classified as community property.
● The following are considered community property when acquired during the marriage,
unless proven otherwise:
1. Family Home constituted by husband and wife is community property. However, an
exclusive property does not become community property even if it is used as a family
home.
2. Proceeds of Life Insurance if the premium was paid from conjugal funds or from
income of either spouse during the marriage. However, if premium was paid from
exclusive funds, the proceeds become exclusive property.
3. Claim against insolvent person can either be exclusive or conjugal depending on who
is entitled to the claim.
 ACP: EXCLUSIVE Properties
● Article 92 of the New Civil Code states that the following
shall be excluded from the community property:
1. Property acquired during marriage by gratuitous title
by either spouse and the fruits and income related to
such property, if any, unless the donor, testator or
grantor expressly provided that it be part of the
community properties of the spouses-donees.
 ACP: EXCLUSIVE Properties
2. Property for personal and exclusive use of either spouse. As
such, personal effects or belongings such clothing, wearing,
apparel, shoes and the life for personal and exclusive use of
either spouse are considered exclusive properties
regardless of what was used to acquire the property.
However, jewelries shall form part of the community
property.
3. 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.
● The husband and wife place in a common fund the
proceeds, products, fruits and income from their
separate properties and those acquired by either or
both spouses through their efforts or by chance.
● Upon dissolution of the marriage or the partnership,
the net gains or benefits obtained by either or both
spouses shall be divided equally between them,
unless otherwise agreed in the marriage Conjugal Partnership
settlements.
of Gains (CPG)
● CPG applies:
a. When the future spouses agree to it in the
marriage settlement; or
b. To conjugal partnerships of gains already
established between spouses before the
effectivity of the Family Code, without prejudice
to vested rights.
 CPG: CONJUGAL Properties
1. That which is acquired by onerous title during the marriage at the
expense of the common fund, whether the acquisition be for the
partnership or for only one of the spouses.
2. That which is obtained by labor, industry, work or profession of
either or both spouses.
3. The fruits received or due during the marriage coming from the
common property or from the exclusive property of each spouse.
○ Under CPG, “fruits” regardless of the source (either exclusive
or conjugal property, including fruits from labor) are classified
as conjugal property.
 CPG: CONJUGAL Properties
4. The share in the hidden treasure discovered during marriage
which the law awards to the spouses or to either them as
finder or proprietor.
5. Property acquired by occupation such as hunting or fishing
by spouses or by either of them.
6. Improvements on the separate property of the spouses at
the expense of the partnership or through the industry of the
spouses or either of them.
 CPG: CONJUGAL Properties
● Family home, when constituted by husband and wife, is a
conjugal property. An exclusive property, when used as
family home, remains an exclusive property.
● Proceeds of life insurance policy, when included in the gross
estate, is considered exclusive property if premium was paid
out of exclusive funds. Otherwise, proceeds are considered
conjugal properties.
● Claims against insolvent person can be conjugal or exclusive
property, depending on whether the claim is for conjugal or
exclusive properties.
 CPG: EXCLUSIVE Properties
1. That which is brought to the marriage as his/her own.
2. That which each acquires during the marriage by
gratuitous title.
3. That which is acquired by right of redemption or by
exchange with property belonging to only one of the
spouses.
4. That which is purchased with the exclusive money of
the wife or of the husband.
 SIMILARITIES
Property CGP ACP
Property inherited or received as donation during
Exclusive Exclusive*
marriage
Property acquired during marriage (other than
Conjugal Community
inheritance or donation)
Property acquired from labor, industry, work or
Conjugal Community
profession of the spouses
Fruits or income due or derived during the
Conjugal Community
marriage coming from the common property
Personal property for exclusive use Exclusive Exclusive**
*Unless the donor, testator or grantor expressly provided that it shall be part of community properties.
**Jewelry shall be considered community property even if they for the exclusive use of either spouse.
 DIFFERENCES
Property CGP ACP
Property before the marriage or brought to the
Exclusive Community
marriage
Fruits or income due or received during the
Conjugal Exclusive
marriage coming from exclusive property.
 Conjugal Deductions
1. The support of the spouses, their common children and legitimate
children of either spouse.
2. All debts and obligations contracted during marriage by the designated
administrator-spouse for the benefit of the conjugal partnership, or by
both spouses, or by one of them with the consent of the other.
3. Debts and obligations contracted by either spouse without the consent of
the other to the extent that the family may have benefited.
4. All taxes, liens, charges and expenses including major and minor repairs
upon conjugal property.
5. All taxes and expenses for mere preservation, made during the marriage,
upon the separate property of either spouse.
 Conjugal Deductions
6. Expenses to enable either spouse to commence or complete a
professional, vocational or other activity for self improvement.
7. Debts before marriage of either spouse in so far as they have redounded
to the benefit of the family.
8. The value of what is donated or promised by both spouses in favor of
their common legitimate children for the exclusive purpose of
commencing or completing a professional or vocational course or activity
for self improvement.
9. Expenses of litigation between spouses unless the suit is found to be
groundless.
 Conjugal Deductions
● Obligations contracted during the marriage are presumed to have benefited the
family and are therefore conjugal deductions.
● Obligations contracted by either spouse before the marriage are exclusive
deductions, unless shown that the family gained benefits from the said
obligations.
● Share of the surviving spouse (1/2 of the net conjugal property), family home and
standard deductions are deductions to be made from the net estate (total of net
conjugal estate and net exclusive estate) to arrive at the net taxable estate.
● Wagering loss during marriage shall be borne by the loser. However, winnings
shall form part of conjugal property.
● Fines and pecuniary damages or indemnities imposed upon either spouse shall be
charges against exclusive property.
 Conjugal/
Exclusive Total
Community
Gross estate:
Real or immovable property XXXX XXXX
Tangible personal property XXXX XXXX
Intangible propertyA XXXX XXXX
Certain transfersB XXXX XXXX
TOTAL GROSS ESTATE XXXX
Less: Ordinary Deductions
LITE XXXX XXXX
Transfer for Public UseC - XXXX
Vanishing Deduction (ACP) XXXX XXXX
Vanishing Deduction (CPG)D - XXXX
TOTAL ORDINARY DEDUCTIONS XXXX
NET COMMUNITY/EXCLUSIVE BEFORE
SPECIAL DEDUCTIONS1 XXXX
 Conjugal/
Exclusive Total
Community
NET COMMUNITY/EXCLUSIVE BEFORE
SPECIAL DEDUCTIONS1 XXXX
Less: Special Deductions
Standard Deduction XXXX
Family Home XXXX
Amounts received under RA 4917E XXXX
NET ESTATE BEFORE SHARE OF THE
SURVIVING SPOUSE XXXX
Less: 1/2 Share of the Surviving Spouse on
the Net Conjugal/Community property
before special deductions1 XXXX
NET TAXABLE ESTATE XXXX
Multiply by: Estate Tax Rate 6%
ESTATE TAX DUE XXXX
 Pro-Forma Computation
AIntangible properties including rights accruing before death, claims against
insolvent persons, RA 4917, and receivable as proceeds from life insurance
taken out by the decedent.
BRefer to certain transferred made before death but will take effect upon death
(transfer mortis causa) as well as transfer under general power of appointment.
CTransfer for public use shall be classified as exclusive deductions unless
expressly provided otherwise.
DAlways an exclusive deduction under CPG.
EAmount received under RA No. 4917 shall be included in the decedent’s gross
estate as part of community or conjugal property.
 ● The future spouses shall be governed by
complete separation of property if they agree
in the marriage settlements that such is their
property relations during the marriage.
● To each spouse shall belong all earnings from
his/her profession, business or industry and all
fruits (natural, industrial or civil) due or
Complete Separation received during the marriage from his/her
of Property separate properties.
● Both spouses shall bear the family expenses in
proportion to their income or, in case of
insufficiency or default thereof, to the current
market value of their separate properties.
● However, the liability of the spouses to
creditors for family expenses shall be solidary.
 Property Regime of Unions Without Marriage
When a man and a woman who are capacitated to marry each other, live exclusively with each
other as husband and wife without the benefit of marriage or under a void marriage, the following
rules shall apply:
1. Wages and salaries shall be owned by them in equal shares.
2. Property acquired by both of them through their work or industry shall be
governed by the rules on co-ownership.
3. Neither party can encumber or dispose by act inter-vivos his/her share in the
property acquired during cohabitation and owned in common, without the
consent of the other, until after the termination of their cohabitation.
○ In the absence of proof to the contrary, properties acquired while they live together
shall be presumed to have been obtained by their joint efforts, work or industry, and
shall be owned by them in equal shares.
○ A party who did not participate in the acquisition by the other party of any property
shall be deemed to have contributed jointly to the acquisition thereof if the former’s
efforts consisted in the care and maintenance of the family and of the household.
 Property Regime of Unions Without Marriage
When a man and a woman who are incapacitated to marry each
other, the following rules shall apply:
1. Only the property acquired by both of them through their actual
joint contribution of money, property or industry shall be owned
in common in proportion to their respective contributions. If
silent, assume equal shares.
2. The share of any party who is married to another shall accrue to
the absolute community or conjugal partnership, as the case
may be, if existing under the valid marriage.
Deductions from
the Gross Estate
Focusing on a Nonresident Alien Decedent
 Deductions: NRA
● The value of the net estate of a decedent who is a non-resident alien in the
Philippines shall be determined by deducting from the value of that part of
the gross estate, which at the time of his/her death, is situated in the
Philippines the following items of deductions:
I. Ordinary Deductions
1. LITE (Proportional deduction)

𝐺𝑟𝑜𝑠𝑠 𝐸𝑠𝑡𝑎𝑡𝑒, 𝑃ℎ𝑖𝑙𝑖𝑝𝑝𝑖𝑛𝑒𝑠

𝑋 𝑇𝑜𝑡𝑎𝑙 𝐿𝐼𝑇𝐸
𝐺𝑟𝑜𝑠𝑠 𝐸𝑠𝑡𝑎𝑡𝑒 𝑊𝑜𝑟𝑙𝑑

2. Vanishing Deduction

3. Transfer for Public Use

 Deductions: NRA

II. Special Deductions

Standard Deduction – P500,000
III. Share of the Surviving Spouse
If the decedent is married
 Deductions: NRA (Illustration)
Mr. Krung, a resident of Seoul, South Korea and a Korean Citizen, died on July 4, 2018 leaving the following properties

Condominium unit in Makati 4,500,000

Family Home in Seoul, Korea 7,000,000
Rest House in Australia 2,750,000
Jewelries received as gift dated August 25, 2017 500,000
Car in Makati 1,000,000
The heirs of Mr. Krung claimed the following deductions:
Funeral expenses 300,000
Claims against the estate 500,000
Claim against insolvent person 500,000
Judicial expenses 100,000
Medical expenses 200,000
Family Home 1,500,000
Standard deductions 1,200,000
 Deductions: NRA (Illustration)
The net taxable estate of Mr. Krung is computed as follows:

Condominium unit in Makati 4,500,000

Jewelries 500,000
Car in Makati 1,000,000
Claims against insolvent person 500,000
Total Gross Estate, Philippines 6,500,000
Less: Allowable Deductions
OD – Pro-rated LITE ([P6.5M/{P16.25M] x P1M) 400,000
OD – Vanishing Deductions 469,231
SD – Standard Deduction 500,000
Taxable Net Estate 5,130,769
 Deductions: NRA (Illustration)

The vanishing deduction was computed as follows:

Value of property 500,000

Less: Mortgage Paid -
Initial Basis 500,000
Less: Proportional deduction (P500/P6,500 x P400) 30,769
Final Basis 469,231
Multiply by: Vanishing Deduction Rate (within 1 year) 100%
Vanishing Deduction 469,231
 Deductions: NRA (Illustration)

Other notes:
● The funeral and judicial expenses are no longer allowed under the
TRAIN Law.
● The allowable amount of LITE shall only be the proportional amount
of Gross Estate Philippines over the Gross Estate World if the
decedent is a nonresident alien.
● The standard deduction shall only be P500,000 since the decedent is
a nonresident alien.
Estate Tax Credit and
Distributable Estate
 Estate Tax Credit
● Tax credit is a deduction from the Philippine estate tax itself.
● While there are numerous taxes that may be deducted from the gross
estate, there is only foreign estate tax that may be deducted against
Philippine estate tax.
● Therefore, “Estate Tax Credit” refers to the taxpayer-decedent’s right to
deduct from the estate tax due the amount of tax he/she has paid in a
foreign country.
● Rationale: To lessen the harshness of international double taxation where
similar estate is being subject to both the foreign estate tax and Philippine
estate tax.
● However, it must be noted that nonresident alien decedents are NOT entitled
to estate tax credit.
 Application of Estate Tax Credit
Accordingly, the estate tax payable is first computed based on the net taxable
estate before tax credit may be deducted, to wit:

Estate Tax Due XXXX

Less: Tax credit for foreign estate taxes paid XXXX
Philippine Estate Tax Payable XXXX
 Computation of Estate Tax Credit
If there is only one foreign country:

(A) Pro-rated Limit

(B) Actual
𝑁𝑒𝑡 𝐸𝑠𝑡𝑎𝑡𝑒, 𝐹𝑜𝑟𝑒𝑖𝑔𝑛 𝐶𝑜𝑢𝑛𝑡𝑟𝑦 OR
𝑋 𝑃ℎ𝑖𝑙𝑖𝑝𝑝𝑖𝑛𝑒 𝐸𝑠𝑡𝑎𝑡𝑒 𝑇𝑎𝑥 𝐷𝑢𝑒 Foreign Tax Paid
𝑁𝑒𝑡 𝐸𝑠𝑡𝑎𝑡𝑒, 𝑊𝑜𝑟𝑙𝑑

The allowed tax credit is the LOWER amount.

 Computation of Estate Tax Credit
If there is only one foreign country (Example): A resident citizen died in 2018 leaving the following:
Taxable Net Estate, Philippines 8,000,000
Taxable Net Estate, USA 2,000,000
Estate Tax Paid, USA 400,000
How much is the estate tax payable?

(A) Pro-rated Limit

(B) Actual Foreign Tax
𝑁𝑒𝑡 𝐸𝑠𝑡𝑎𝑡𝑒, 𝐹𝑜𝑟𝑒𝑖𝑔𝑛 𝐶𝑜𝑢𝑛𝑡𝑟𝑦 Paid
𝑋 𝑃ℎ𝑖𝑙𝑖𝑝𝑝𝑖𝑛𝑒 𝐸𝑠𝑡𝑎𝑡𝑒 𝑇𝑎𝑥 𝐷𝑢𝑒
𝑁𝑒𝑡 𝐸𝑠𝑡𝑎𝑡𝑒, 𝑊𝑜𝑟𝑙𝑑 OR
= 120,000 = 400,000

The allowed tax credit is the LOWER amount = P120,000

 Computation of Estate Tax Credit
The estate tax payable is computed as follows:

Estate Tax Due (P10M x 6%) 600,000

Less: Tax credit for foreign estate taxes paid 120,000
Philippine Estate Tax Payable 480,000
 Computation of Estate Tax Credit
If there are more than one foreign countries:

(A) Per Foreign Country Limit (B) All Foreign Countries Limit

𝑁𝐸, 𝐴𝐿𝐿 𝑓𝑜𝑟𝑒𝑖𝑔𝑛 𝐶𝑜𝑢𝑛𝑡𝑟𝑖𝑒𝑠

𝑁𝐸, 𝐹𝑜𝑟𝑒𝑖𝑔𝑛 𝐶𝑜𝑢𝑛𝑡𝑟𝑦
𝑋 𝑃𝐻 𝐸𝑠𝑡𝑎𝑡𝑒 𝑇𝑎𝑥 𝐷𝑢𝑒 OR 𝑋 𝑃𝐻 𝐸𝑠𝑡𝑎𝑡𝑒 𝑇𝑎𝑥 𝐷𝑢𝑒
𝑁𝐸, 𝑊𝑜𝑟𝑙𝑑 𝑁𝐸, 𝑊𝑜𝑟𝑙𝑑

(C) Actual foreign tax paid

The allowed tax credit is the LOWEST amount.
 Computation of Estate Tax Credit
If there are more than one foreign countries: (Example): A resident citizen died
in 2018 leaving the following:
Taxable Net Estate, Philippines 8,000,000
Taxable Net Estate, Japan 3,000,000
Taxable Net Estate, UK 2,000,000
Taxable Net Estate, Russia (1,000,000)
Estate Tax Paid, Japan 200,000
Estate Tax Paid, UK 100,000

How much is the estate tax payable?

 Limit Actual Allowed
LIMIT A – PER COUNTRY
Japan:
3M 180,000 200,000 180,000
x P720,000
12M
UK:
2M 120,000 100,000 100,000
x P720,000
12M
Limit A 280,000
LIMIT B – ALL FOREIGN COUNTRIES
All foreign countries:
4M 240,000 300,000 240,000
x P720,000
12M
Limit B 240,000
ALLOWABLE TAX CREDIT 240,000
 Computation of Estate Tax Credit
The estate tax payable is computed as follows:

Estate Tax Due (P12M x 6%) 720,000

Less: Tax credit for foreign estate taxes paid 240,000
Philippine Estate Tax Payable 480,000
 Net Distributable Estate
● Net taxable estate – result of the application of the
law under estate taxation.
● Net distributable estate – the amount arrived at from
gross estate consisting all properties in the
possession and control of the decedent at the time of
death and actual expenses, charges and payments
from the gross estate.
 Net Taxable Net Distributable
Estate Estate
Gross Estate
Real or immovable property Included Included
Tangible personal property Included Included
Intangible personal property Included Included
Transfers in contemplation of death Included Included
Revocable transfers Included Included
Transfers under general power of appointment Included Included
Proceeds of life insurance Included Included
Exclusions (e.g. SSS and GSIS) NOT included Included
 Net Distributable
Net Taxable Estate
Estate
Allowable deductions
Funeral expenses No longer allowed Actual
Judicial expenses No longer allowed Actual
Unpaid taxes Actual Actual
Claims against the estate Actual Actual
Losses Actual Actual
Transfers for public purpose Actual Actual
Vanishing deduction As computed Not considered
Standard deduction Considered Not considered
Family Home With limit Not considered
Medical expenses No longer allowed Actual
Amount received under RA 4917 Actual Not considered
½ of net conjugal ½ of net conjugal
Share of surviving spouse
properties properties
 Net Distributable Estate (Example)
A resident alien decedent who is a head of the family, died in 2018, leaving the following:

House and lot in Ayala (Family home) 30,000,000

Car in Ayala 5,000,000
Cash in Bank, Ayala Alabang 15,000,000
House and lot, Global City 10,000,000
Cash in Bank, Global City 15,000,000
House and Lot, Libis Quezon City 10,000,000
Cash in Bank, Libis Quezon City 15,000,000
Funeral Expenses 1,000,000
Judicial Expenses 1,500,000
Claims against the estate 3,000,000
Losses (50% were incurred more than 1 year after
4,000,000
the death of the decedent)
Medical Expenses 3,000,000
 Net Distributable Estate (Example)
The Estate Tax Due is computed as follows:

Gross Estate 100,000,000

Deductions:
Claims against the estate 3,000,000

Losses (within the settlement period) 2,000,000

Standard Deduction 5,000,000

Family Home 10,000,000 (20,000,000)

Net Taxable Estate 80,000,000
Multiply by: Estate Tax Rate 6%
Estate Tax Due 4,800,000
 Net Distributable Estate (Example)
The Net Distributable Estate is computed as follows:

Gross Estate 100,000,000

Deductions:
Funeral expenses 1,000,000
Judicial expenses 1,500,000
Claims against the estate 3,000,000
Losses 4,000,000
Medical expenses 3,000,000
Estate tax due 4,800,000 (17,300,000)
Net Distributable Estate 82,700,000
Hence, the net distributable estate is the actual portion of the estate to be inherited by the heirs, which is
computed by considering the realizable value of the gross estate reduced by the amount of actual
deductions that will diminish/reduce the gross estate.
Reference
Transfer & Business Taxation
Chapters 3 to 5
2020 Edition
Tabag & Garcia
 “Do not worry if you feel tired.
That is your body telling you that you are working
hard to achieve your dreams.
Carry on.
Take your rest.
But do not stop completely.
Persevere.
YOU GOT THIS.”

- Sir Allen
Thank you!