Chapter 3 - Deductions in Gross Estate Flashcards
(25 cards)
Enumerate
Ordinary deductions
Gross Estate
Losses, Indebtedness, Taxes
Vanishing Deduction
Transfers for Public Use
LITE VTFPU
Term
Losses arising from acts of God (storms, shipwrecks, etc) and acts of man (robbery, theft, embezzlement)
Casualty Losses
Inclusion, Exemption, Exclusion, Deduction
Casualty Losses
Gross estate
Deductions
Question
Amount deductible from gross estate for casualty losses
Value of the property lost
Enumerate (four)
Requisites for deductibility of losses
- Arising exclusively from acts of God or acts of man
- Not compensated by insurance or otherwise
- Not claimed as deduction in income tax return of estate subject to income tax
- Incurred during the settlement period of the estate
Settlement period - period prescribed by law to file and pay the estate tax
Term
Debts or demands of a pecuniary nature which could have been enforced against the deceased in his lifetime and could have reduced to simple money judgements
Indebtedness or Claims against the estate
Inclusion, Exclusion, Exemption, Deduction
Funeral, medical and judicial expenses
Gross Estate
No longer a deduction
Inclusion, Exclusion, Exemption, Deduction
Unpaid mortgages or Indebtedness on property
Gross Estate
Inclusion; Deduction
to be allowed as deduction, GE must include FMV of the property encumbered; amount of deduction would be the outstanding debt or mortgage
Inclusion, Exclusion, Exemption, Deduction
Accommodation Loan
Gross estate
Inclusion
as receivable of the estate
but if there is legal impediment to recognize the same as receivable, said unpaid obligation/mortgage payable shall not be allowed as deduction
Term
Dispositions in a last will and testament or transfers to take effect after the death in favor of the government of the Philippines or any of its political subdivisions thereof for exclusively public purposes
Transfers for public use
Inclusion, Exclusion, Exemption, Deduction
Transfers for Public Use
Inclusion and deduction
to be allowed as deduction from GE, same amount shall be included in computation of GE
Term
Deduction for property previously taxed
Vanishing deduction
Term
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 from prior decedent by way of inheritance or from a donor by way of gift or donation
Vanishing deduction
Enumerate
Vanishing deduction rates
within one year - 100%
beyond one year to 2 years - 80%
beyond 2 years to 3 years - 60%
beyond 3 years to 4 years - 40%
beyond 4 years to 5 years - 20%
period (from receipt up to decedent’s death)
Enumerate
Special deductions
Gross Estate
- Standard deduction
- Family Home
- RA 4917 Amounts received by heir from decedent’s employer as a consequence of death
Enumerate
Allowable amounts for standard deduction
- P5,000,000 - citizen or resident
- P500,000 - non resident alien
Question
What is the amount of family home allowable as deduction?
Whichever is lower of:
* P10,000,000 or
* FMV at time of decedent’s death of the family home and land on which it stands
Question
Standard deductions allowed for Non-resident alien
Standard deduction of up to P500,000 only
Family home and RA 4917 can only be claimed by residents or citizens
Term
The dewilling house, including the land on which it is situated, where the husband and wife, or head of the family, and members of their family reside, as certified to by the Barangay Captain of the locality
Family Home
True or False
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 or studies or work abroad
True
True or False
For purposes of availing of a family home deduction to the extent allowable, a person may constitute **only one **family home
True
Enumerate
Requisites for deductibility of family home
- Decedent was married or if single, was a head of the family
- Family home as well as land on which it stands must be owned by the decedent (must be included in computation of GE)
- Family home must be the actual residential home of the decedent and his family at the time of his death
- Allowable deduction is lower of FMV of the family home or P10,000,000
True or False
Amounts received by heirs under RA 4917 must be included in the GE of the decedent to be deductible
True
Question
Deduction from GE aside from ordinary and special deductions.
Net Share of the Surviving Spouse
