Taxation 2 │GROSS ESTATE

FLABERT VILLASENCIO, CPANotre Dame of Dadiangas University

Learning Objectives

▪Define gross estate

▪ Identify components of gross estate

▪Determine the value of gross estate

▪ Identify some additions to the gross estate

Gross Estate

▪Consists of all property owned by a decedent at the time of his death excluding the exclusive properties of the surviving spouse

Components of Gross Estate

▪Real Properties–Immovable properties such as land, building, resort, etc.

▪Personal Properties–Franchises, shares, obligations or bonds issued by foreign corporation provided that…▪ 85% is in the Philippines▪ It acquired business situs in the Philippines▪ It is established in the Philippines

Resident/Citizen

Non-resident (no reciprocity)

Non-resident (with

reciprocity)

Real Properties

Within

Without

Personal Properties

Tangible- within

Tangible-without

Intangible- within

Intangible- without

Summary Components of Gross Estate

Vacation house in HKLand in ZamboangaHouse in CamarinesApartment in NYCar in HKCar in PhilsJewelries in NYFranchise, NYFranchise, HKFranchise, PhilsA/R from PhilsA/R from NYA/R from HKInvestment, NYInvestment, PhilsInvestment, HKDomestic Shares, PhilsDomestic Shares, New YorkForeign Shares, 90% in PhilsForeign Shares, 30% in PhilsForeign shares, 60% in Phils

Compute for the gross estate: Resident or citizen, Non Resident (no reciprocity and with reciprocity)

………………………………………………………………………………….1,200,000……………………………………………………………………………………. 80,000………………………………………………………………………………. 3,000,000………………………………………………………………………………. 4,500,000

……………………………………………………………………………………. 700,000……………………………………………………………………………………. 650,000……………………………………………………………………………………. 125,000……………………………………………………………………………………. 300,000……………………………………………………………………………………. 260,000……………………………………………………………………………………. 380,000……………………………………………………………………………………. 275,000……………………………………………………………………………………. 240,000……………………………………………………………………………………. 385,000……………………………………………………………………………………. 730,000……………………………………………………………………………………. 300,000……………………………………………………………………………………. 245,000……………………………………………………………………………………. 140,000……………………………………………………………………………………. 250,000……………………………………………………………………………………. 100,000……………………………………………………………………………………. 270,000……………………………………………………………………………………. 425,000

Answers

Resident/Citizen-P14,555,000

Non-resident (no reciprocity)

4,925,000

Non-resident (with reciprocity)3,730,000

Valuation of Gross Estate▪ Real & Personal Property-o FMV at the time of death whichever is higher.

FMV of land P1,200,000

Cost of land 1, 000,000

FMV of BIR 1,400,000

What will be the valuation of the land?

Answer: FMV of BIR, P1,400,000

▪ Stocks, bonds & other securitieso If Listed In PSE, get the average of highest and lowest

of the SP x shares.o If not listed in PSE, for common stock-BV, for

preferred stock, par value

Additions to Gross Estate

1. Revocable Transfer transfers of property with the

retention or reservation of rights over the property while he still lives.

Subject to a right ofRevoke.

Land, P500,000

QUESTION: Upon death, is the transfer part of his GROSS ESTATE?

2. Transfers in contemplation of deathproperties that are not physically available in the estate at the time of death in anticipation of his death.

Property

QUESTION: Is the transfer part of his gross estate?

Additions to Gross Estate

3. Property passing under GPA- power of appointment is the right to designate by will or deed the person who will received the property.

Property with a clause that

She is free to transfer it to anybody.

QUESTION: is the appointment part of his gross estate?

Additions to Gross Estate

4. Decedent’s Interest- dividends, profits, proceeds in any insurance, right of usufruct.

Additions to Gross Estate

5. Proceeds Of Life Insurance with revocable beneficiary, administrator or his executor.

P 1,500,000

QUESTION: is the proceeds part of his gross estate?

Additions to Gross Estate

6. Transfers for insufficient consideration

Land of P1,500,000For P200,000

QUESTION: is the transfer part of his gross estate? How much?

Additions to Gross Estate

7. Claims against insolvent person8. Amount received by heirs under RA 4917

Additions to Gross Estate