ESTATE TAX THEORIES REGARDING THE PURPOSE OF ESTATE TAX 1. Benefit-received theory 2. State-partnership theory 3. Ability-to-pay theory 4.

Redistribution-of-wealth theory EXCEPTIONS FROM THE GROSS ESTATE 1. Merger of usufruct in the owner of the naked title 2. Fideicommisary substitution 3. Transmission from the first heir, legatee or donee in favour of another beneficiary, in accordance with the desire of the predecessor 4. Bequest, devises, legacies or transfers to social welfare, cultural and charitable institutions, no part of the net income of which inures to the benefit of any individual. Provided, however, that not more than 30% of the transferred shall be used by such institutions for administration. VALUATION OF THE GROSS ESTATE FMV as determined by the Commissioner (Zonal Value) or FMV as shown in the schedule of values fixed by the provincial and city assessors, whichever is higher. DEDUCTIONS FROM GROSS ESTATE A. Citizens and Resident Aliens 1. Expenses, Losses, Indebtedness, and Taxes (ELIT) or Ordinary Deductions a. Funeral expenses (5% of gross estate, max 200,000) b. Judicial expenses c. Claims against the estate d. Claims against insolvent persons e. Unpaid mortgages f. Unpaid taxes g. Losses 2. Vanishing deductions 3. Transfer for public use 4. Family home (max 1M) 5. Standard deduction (1M) 6. Medical expenses (1 year prior to death, max 500,000) 7. Amount received by heirs under RA 4917 8. Share of surviving spouse in the conjugal B. Non-resident Aliens 1. Expenses, Losses, Indebtedness, and Taxes (ELIT) (Ordinary deductions) 2. Transfer for public use 3. Vanishing deductions on proper in the Philippines 4. Conjugal share of the surviving spouse. PROCEDURE FOR ULTIMATE SETTLEMENT OF ESTATE TAX A. Filing of Notice of Death - 2 months after death - When the transfer is subject to tax - Filed when gross estate exceeds 20,000 although exempt B. Filing of estate tax return 1. When gross estate exceeds 200,000. 2. Estate consists of registered or registrable properties. 3. 6 months from the decedents death o Exemption: Commissioner may grant extension of less than 30 days C. Payment of tax

Pay-as-you-file.

PERSONS LIABLE TO PAY a. Paid by the executor or administrator, before delivery to any beneficiary of his distributive share of the estate. b. The beneficiary shall be subsidiary liable to the extent of his distributive and of such portion of the estate tax as his distributive share bears to the value of the total net estate.

DONORS TAX REQUISITES OF A TAXABLE (VALID) DONATION 1. Capacity of the donor 2. Donative intent (intention to donate) 3. Delivery, whether actual or constructive, of the subject gift 4. Acceptance by the donee STRANGER 1. Not a brother or sister (either by whole or by half-blood), spouse, ancestor and lineal descendant 2. Not a relative by consanguinity in the collateral line within the fourth civil degree of relationship SPECIFIC CASES OF TRANFERS INTER VIVOS 1. Donations between spouses 2. Donations by one of the spouses 3. Donations made to conceived and unborn child 4. Contribution for election campaign 5. Transfer for less than adequate and full consideration 6. Forgiveness of indebtedness 7. Renunciation of the share of the surviving spouse 8. Renunciation of inheritance to a co-heir 9. Renunciation of inheritance to another person not a co-heir 10. Life insurance with third person as beneficiary 11. Remuneratory donations DONATIONS WHICH ARE TAX EXEMPT A. Dowries Requisites 1. Was made on account of marriage 2. Was made before or within one year after the celebration of marriage 3. Donor is parent 4. Donee is legitimate, recognized natural or adopted child of donor 5. Amount of the gift exempted is only to the extent of the first P10,000 B. Gifts made to the Government - Entity must not for profit C. Gift in favour of an educational and/or charitable, religious, cultural, or social welfare corporation, institution, accredited non-government organization or philanthropic organization or research institution D. Encumbrances on the property donated if assumed by the donee E. Donation made to the following entities exempted under special laws

LGU REMEDIES OF THE GOVERNMENT I. As to the Nature of Proceeding A. Administrative Remedies 1. Tax lien 2. Distraint of personal property or garnishment of bank deposits 3. Levy of real property 4. Forfeiture 5. Compromise and abatement 6. Penalties and fines 7. Suspension of Business Operations B. Judicial 1. Civil 2. Criminal II. As to procedure A. Assessment and Collection B. Collection without Assessment REMEDIES OF TAXPAYER I. Before Payment A. Administrative Remedies 1. Protest against Assessment 2. Entering into a Compromise B. Judicial remedies II. After Payment A. Administrative Remedies 1. Claim for Tax Refund or Tax Credit B. Judicial Remedies TWO KINDS OF ASSESSMENT AND COLLECTION 1. Normal or Ordinary Assessment and Collection 2. Abnormal or Extraordinary Assessment and Collection ASSESSMENT - Official action of an administrative officer in determining the amount of tax due from a taxpayer, OR it may be a notice to the effect that the amount therein stated is due from the taxpayer as a tax with a demand for payment of the tax or deficiency stated therein