Taxation 2

DEDUCTIONS FROM GROSS ESTATE

FLABERT VILLASENCIO, CPA

Notre Dame of Dadiangas University

Funeral

Expenses
Losses
Indebtedness
Taxes

for public use

Transfer
Amount received by heir under RA 4917
Vanishing deductions
Share of surviving spouse
Judicial

Claims against the estate

Claims against insolvent person

ORDINARY

SPECIAL

Family home
Medical Expenses
Standard deduction

Amount Received Under RA 4917

oRefers to the amount received by heirs as a
retirement benefit of the decedent
oTo be Deductible:
o Has been in the service for the same employer for
at least 10 years
o Not less than 50 years of age
o Availed only once

Share of the Surviving Spouse

(Communal or Conjugal Properties Net Estate)
x 50%

Special Deductions
1. Family Home
oThe dwelling house including the land to
where it is located

oFMV of the Family Home (Gross Estate)

oFMV of the Family Home vs 1,000,000
(Deductions)
oExcess subject to Estate Tax
oExclusive Property taken up at 100%
oConjugal Property taken up at 50%

Special Deductions
1. Family Home
Illustration:
Residential Lot (Conjugal) 2,300,000
Residential House (Exclusive) 800,000

How much is deductible?

Residential Lot 1,150,000
Residential House
800,000
Family Home
1,950,000
Deductible 1,000,000

Special Deductions
2. Medical Expense
oNot exceeding 500,000 can be
claimed
oIn excess of 500,000 can no longer
be deducted
oThe expenses must have been
incurred within one year prior to
death

Special Deductions

3. Standard Deduction

oAmounts to 1,000,000
oNo need of substantiation
oAny Citizen and Resident

Allocations of Deductions
oIf the total amount exceeds the
statutory limit, the basis is TOTAL
AMOUNT
oIf no means to trace the
deduction, the basis will be the
total gross estate

Non Resident Alien Decedent

oAllowed Deductions
oELIT
oAllowable Deduction=
World ELIT x (PGE/TGE)

oTransfer for Public Use

oVanishing Deductions

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