tax estate 1.2

• Property Regimes Problem

  The decedent was married at the time of death. He was survived by his wife and children.
• Deductions from Gross Estate

  • Real Properties (excluding Family Home)
  • Family Home
  • Personal Properties
  • Taxable Transfers
  • Business Interest
  • Gross Estate
  • Losses (casualty)
  • Claims against insolvent persons
  • Claims against the estate (indebtedness)
  • Unpaid Taxes
  • Vanishing Deduction
  • Transfers for Public Use
  • Family Home
  • Retirement Benefits
  • Standard Deduction
• Computing the Estate Tax

  1. Exclusive

  2. Common

  3. Total
• Ordinary Deductions (Losses + VCUT)

  • Losses
  • Claims against insolvent persons
  • Claims against the estate
  • Unpaid Taxes/Mortgage
  • Vanishing Deduction
  • Transfers for Public Use
• Special Deductions


  • Family Home
  • Retirement Benefits under RA 4917
  • Standard Deduction
• Ordinary Ded - Losses

  1. Day of Death

  2. 1 day after death

  3. 2 days after death

  4. Will the house still form part of the Gross Estate?
• Ordinary Ded - Losses

  • Timing: During the settlement of the estate, not later than the last day for the payment of the estate tax (1 year)
  • Cause: Arising from SHI (shipwreck, fires, theft, embezzlement, robbery, storms or other casualties)
  • Not compensated for by insurance
  • Have not been claimed as a deduction for the income tax purposes
• Insolvency

  Insolvent shall refer to the financial condition of a debtor that is generally unable to pay its or his liabilities as they fall due in the ordinary course of business or has liabilities that are greater than its or his assets
• Ordinary Ded – Claims against the estate

  • Debts or demands of pecuniary nature
  • Enforceable against the deceased
  • Transmissible
  • AVENGERS: Adequate and full consideration, Valid, Enforceable, Not condoned, Good Faith, Existing at the time of death, within the Reglementary period (not prescribed), Substantiated
• Reglementary Period of Debt


  • Oral Debt – 6 years
  • Written Debt – 10 years
• Documentary requirements in case of simple loan


  • Duly notarized (XPN: Financial Institutions)
  • Duly notarized Certification from the creditor as to the unpaid balance of the debt, including interest as of the time of death
  • Proof of financial capacity of the creditor to lend the amount at the time the loan was granted
  • Latest audited balance sheet with a detailed schedule of its receivable showing the unpaid balance of the decedent-debtor
  • A statement under oath executed by the administrator or executor of the estate reflecting the disposition of the proceeds of the load if said loan was contracted within three (3) years prior to the death of the decedent
• Documentary requirements in unpaid obligation arose from purchase of goods or services

  • Pertinent documents evidencing the purchase of goods or service
  • Duly notarized Certification from the creditor as to the unpaid balance of the debt, including interest as of the time of death
  • Latest audited balance sheet with a detailed schedule of its receivable showing the unpaid balance of the decedent-debtor
• Ordinary Ded – Unpaid Mortgages

  • Gross Estate: include property mortgaged
  • Deductions from Gross Estate: amount of the unpaid mortgage
• Ordinary Ded – Unpaid Taxes

  Deductions from Gross Estate: taxes accruing before death
• Ordinary Ded – Transfers for Public Use

  The amount of all bequests, legacies, devises or transfer to or for the use of the Government of the Republic of the Philippines, or any political subdivision thereof, for exclusively public purposes
• Ordinary Ded – Vanishing Deduction

  This deduction is also referred to as a deduction for "property previously taxed." It is an amount allowed to reduce the taxable estate of a decedent where a property included in his gross estate was previously received by him, either by way of inheritance or by way of gift or donation. The property has been the object of a previous transfer taxation, either estate tax or donor's tax.
• Ordinary Ded – Vanishing Deduction

  • Requisites (PAPING V): 1. Any property situated in the Philippines
  • Such property can be ascertained or identified as having been received by the decedent form the donor by gift, or from such prior decedent by gift, bequest, devise or inheritance, or which can be identified as having been acquired in exchange for property so received
  • Allowed only where a donor's tax or estate tax was finally determined and paid by or on behalf of such donor, or the estate of such prior decedent
  • Property is included in the gross estate
  • No vanishing deduction was allowed in determining the value of the net estate of the prior decedent
  • Acquired by gratuitous title: from any person who died within five (5) years prior to the death of the decedent or transferred to the decedent by gift within five (5) years prior to his death
• Ordinary Ded – Vanishing Deduction

  COMPUTATION: (VAMPIRE FINDER)
• Classification of Ordinary Deductions

  • Conjugal / Community
  • Exclusive
• Classification of Ordinary Deductions

  • Losses: Depends on the property lost
  • CAIP: Depends on the property lost
  • CATE: Support, benefit of the family, education; If for Illegitimate Child of one spouse; Gambling, Crime, Quasi-delicts
  • Repairs of common property
  • Repairs of exclusive property
  • Preservation of comm/exc property used by family
  • Preservation of exclusive property not used by family
  • VD: Depends on the property subject to VD
  • TPU: Always exclusive