Chapter 4 - Property Relations
Chapter 4 - Property Relations
Chapter 4 - Property Relations
B
Shares, domestic corporation P500,000
Tangible personal property 1,500,000
Gross Estate 2,000,000
Prorated LIT (500,000 x 2,000/2,500) (400,000)
Standard deduction (500,000)
Taxable Estate P1,100,000
TAX DUE
Estate Tax Due (P1.1M x 6%) P66,000
PROBLEM SOLVING
P4.1
ACP CPG
1. C E
2. C C
3. C C
4. C C
5. C E
6. C C
7. E E
8. E C
9. C C
10. C C
11. C C
12. E E
13. C E
14. E C (All fruits or incomes are common property under CPG. Hence, the
property purchased shall be classified as common.
15. E E
P4.2
Absolute Community of Property (ACoP)
a) P12,400,000
b) P19,500,000
c) P9,750,000
d) P17,150,000
VANISHING DEDUCTION**
Value to Take/Initial Basis P15,000,000
Proportional Deduction (15,000/45,000 x P1,500,000) (500,000)
Final Basis P14,500,000
x Vanishing Deduction % 80%
Vanishing Deduction P11,600,000
***VANISHING DEDUCTIONS:
Value to take P500,000
1st Deduction: Mortgage paid -
Initial basis P500,000
2nd Deduction: Proportionate deduction
(500/7,000) x (548,864 + 200,000) (53,490)
Final Basis P446,510
x Vanishing rate 40%
Vanishing Deduction P178,604
**** Since the properties were already classified as exclusive and common, it should be assumed that the exclusive properties were already
inclusive of transfer for public use.
Special Deductions:
Standard deduction (5,000,000)
RA 4917 500,000
Medical expenses -
Net Taxable Estate P49,500,000
Estate Tax Due (P49,500,000 x 6%) P2,970,000
* *Family home is not allowed as a deduction for single decedent
**To be deductible, the legacy/devise should be included first in the decedent’s gross estate
***Assume the debtor is an insolvent person.
P4.5
a) Vanishing deduction = P18,243,902
b) Net Taxable estate = P31,066,098
c) Estate tax due = P1,860,366
Exclusive Conjugal Total
Land P30,000,000
House and Lot (Family Home) P50,000,000
Other tangible personal properties 22,000,000
Claims against insolvent persons 500,000 P102,500,000
Ordinary deductions:
Other claims against conjugal properties (5,000,000)
Claims against insolvent persons (500,000)
Unpaid mortgage** (3,500,000)
VANISHING DEDUCTION* (18,243,902) (13,560,976)
Net exclusive/conjugal P11,756,098 P68,500,000 P80,256,098
Special deductions:
Standard deduction (5,000,000)
Family Home (10,000,000)
Medical expenses -
Share of the surviving spouse (34,250,000)
TAXABLE ESTATE P31,006,098
Estate Tax Due (P31,006,098 x 6%) P1,860,366
PROBLEM SOLVING
P5.1 One foreign country only:
Limit 1 (Per foreign country with tax payments only): Limit Actual Allowed
Singapore: 5,000/20,000 x P1,200,000 P300,000 P200,000 P200,000
China: not included in the determination of Limit 1 since - - -
there was no estate tax paid in China
Japan: 2,000/20,000 x P1,200,000 120,000 100,000 100,000
P300,000
Limit 2 (all foreign countries including China):
10,000/20,000 x P1,200,000 P600,000 300,000 300,000
ALLOWED TAX CREDIT P300,000
P5.4
a) Net Taxable estate = P7,474,000
b) Estate tax due = P448,440
c) Net Distributable Estate = P11,731,560
Ordinary Deductions:
LITe:
Claim against the estate (Philippines) P940,000
Unpaid Philippine income tax for 2016 and 2017 320,000
Loss on December 31, 2018 due to theft 180,000
Claim against insolvent person *** 200,000 (1,640,000)
TFPU (1,400,000)
Vanishing Deduction (486,000)
Special Deductions:
Standard deduction (5,000,000)
Family Home in USA; (not allowed) -
NET TAXABLE ESTATE P7,474,000
Estate Tax Due (P7,474,000 x 6%) P448,440
MULTIPLE CHOICE
1. C 5. A
2. C 6. C
3. D 7. B
4. C
Supporting Computations:
No.5 A
Net taxable estate P4,000,000
x Estate tax rate 6%
Estate tax due P240,000
Less: Estate tax credit
Limit = P1/4 x P240,0000 = P60,000 (60,000)
Actual tax paid abroad = P80,000
Estate tax payable P180,000