CHAPTER 8-1.

PROBLEMS
1. a. Tax on P88,620 Exempt
b. Tax on P200,000 Exempt
520,125 x 8% 41,610

c. Tax on P2,000,000 135,000

d. Tax on P10,000,000 1,215,000.00

2,069,322 x 20% 413,864.40
Estate tax 1,628,864.4

2. Conjugal properties P2,340,00

0
Exclusive properties 2,260,00
0
Gross estate 4,600,00
0
Less: Ordinary deductions
Funeral expenses, actual P120,000
Judicial expenses 45,000
Claims against conjugal properties 55,000 ( 220,000
)
Standard deductions (1,000,00
0)
Net estate 3,380,000
Less: Share of surviving spouse
Gross conjugal P
2,340,000
Less: Conjugal deductions 220,000
Net conjugal 2,120,000
Share (2,120,000 x 1/2) 1,060,00
0
Net estate subject to tax 2,320,00
0

3. Conjugal Exclusive Total

Family home P2,000,00
0
Miscellaneous personal properties 800,000
Time deposit (P50,000 x ) 25,000
Real estate (P1,000,000 + 500,000) ________ 1,500,0
00
Gross estate 2,825,000 1,500,00 4,325,000
0
Deductions:
Ordinary -
Unpaid mortgage P 120,000
Funeral expenses 180,000
Judicial expenses 60,000
Total 360,000 ( 360,000
)
Special:
Family home (maximum) (1,000,000
17
 )
Standard deductions (1,000,000
)
Net estate 1,965,000
Less: Share of surviving spouse (P2,825,000 360,000) x 1/2 1,232,500
Net taxable estate 732,500

4. Conjugal Exclusive Total

Commercial land 1,400,0
00
Family home (P250,000 + 1,300,000) 1,550,000
Fishpond 280,000
Motor vehicle 160,000
Time deposit, PNB 90,000
Other personal properties 800,000 ________
Total 2,880,000 1,400,00 4,280,000
0
Deductions:
Ordinary -
Unpaid mortgage, commercial land 200,000
Claim against the estate(200,000 x 18% x 27,000
9/12)
Unpaid mortgage, family home 220,000
Funeral expenses 55,000
Judicial expenses 15,000
Total 517,000 ( 517,000
)
Special -
Standard deductions (1,000,000
)
Family home (1,550,000 x ) ( 775,000
)
Net estate 1,988,000
Less: Share of surviving spouse (2,880,000 517,000) x 1,181,500
1/2
Net taxable estate 806,500

5. Conjugal
Family home P
2,900,000
Personal property (1,600,000 100,000) 1,500,000
Gross estate 4,400,000
Less: Deductions
Ordinary -
Funeral expenses 100,000
Claims against the estate 75,000
Losses 25,000 ( 200,00
0)
Special -
Standard deduction 1,000,000
Family home (2,900,000 x ), limit 1,000,000 (2,000,000
)
18
 Net estate 2,200,000
Less: Share of surviving spouse (4,400,000 200,000) x 1/2 2,100,000
Net taxable estate 100,000

6. Family home 1,340,000

House and lot Bangkok 2,200,500
Domestic shares 130,000
DBP Bonds 30,000
Appliances, Kampuchea 168,000
Receivable from an insolvent debtor, Manila 25,000
Receivable from an insolvent debtor, Kampuchea 35,000
Gross conjugal / Gross estate 3,928,500
Deductions:
Ordinary -
Funeral expenses (42,500 + 20,000) 62,500
Claims against the estate 50,000
Unpaid mortgage, Manila 75,000
Unpaid mortgage, Bangkok 50,000
Bad debts, Manila 25,000
Bad debts, Kampuchea 35,000 ( 297,50
0)
Special -
Family home (1,340,000 x ) 670,000
Standard deduction 1,000,000 (1,670,000
)
Net estate 1,961,00
0
Less: Share of surviving spouse (3,928,500 297,500) 1,815,500
x 1/2
Net taxable estate 145,500

72. PROBLEMS
1. Family home P1,800,00
0
Shares of stock (2,000 x P20) 40,00
0
Total conjugal 1,840,000
Add: Exclusive property ricemill 1,500,000
Gross estate 3,340,00
0
Deductions
Ordinary -
Claims against the estate 32,00
0
Funeral expenses, actual 40,500 ( 72,50
0)
Special deductions -
Family home (1,800,000 x 1/2) 900,000
Standard deduction 1,000,00 (1,900,000
0 )
Net estate 1,367,50
0
Less: Share of surviving spouse (1,840,000 - 72,500) x ( 883,75
19
 1/2 0)
Net estate subject to tax 483,750

2. Conjugal properties: Conjugal Exclusive Total

Cash 500,000
Prize in a raffle 50,00
0
Proceeds of insurance 150,00
0
House and lot, family home 1,900,00
0
Other personal properties 800,00
0
Other real properties 1,500,00
0
Claims against insolvent persons 30,00
0
Gross estate 4,930,00 4,930,00
0 0
Less: Deductions
Ordinary
Funeral expenses 195,000
Judicial expenses 15,00
0
Bad debts 30,00
0
Unpaid mortgage, Laguna 350,00
0
Unpaid taxes 35,00 ( 625,000
0 )
Special -
Family home (1,900,000/2) ( 950,00
0)
Standard deduction (1,000,00
0)
Net estate 2,355,555
Less: Share of surviving spouse
Gross conjugal 4,930,000
Less: Conjugal deductions 625,00
0
Net 4,305,00
0
Share (4,305,000 x 1/2) 2,152,500
Net estate subject to tax 203,055

3. Family home 1,500,000

House in Manila 2,200,00
0
Shares of stock (110+105)/2 x 5,000 537,50
0
Amount received from employer 80,00
0
Gross estate 4,317,500
Less: Deductions
Ordinary
20
 Funeral expenses 135,000
Judicial expenses 25,000
Legacy to Red Cross 15,000
Claims against the estate 50,000
Received from employer (RA 4917) 80,000 ( 305,000
)
Special
Family home, limit 1,000,000
Standard deduction 1,000,000 (2,000,000
)
Net taxable estate 2,012,500
Tax on P2,000,000 135,000
12,500 x 11% 1,375
Estate tax 136,375
4. Cash 135,000
House and lot 950,00
0
Medical equipments 450,00
0
Land in Camarines Sur 465,000
Gross estate 2,000,00
0
Less: Deductions
Ordinary
Funeral expenses
Cremation 150,000
Cost of coffin 20,000
Expenses of the wake 60,000
Burial plot and tombstone 22,000
Total 252,000
Limit (2,000,000 x 5%) 100,00
0
Judicial expenses 5,00
0
Loans from GSIS 80,0
00
Unpaid mortgage (100,000 70,00
30,000) 0
Vanishing deduction (Schedule 204,16 ( 459,165
1) 5 )
Special
Standard deduction (1,000,00
0)
Medical expenses ( 15,00
0)
Net estate subject to tax 525,83
5

Tax on P500,000 P15,000.0

0
25,835 x 8% 2,066.
80
Estate tax 17,066.
80
21
 Schedule 1: Vanishing Deduction
Lower value P420,00
0
Less: Mortgage paid 30,00
0
Initial basis 390,00
0
Less: Deductions (pro-rated)
Funeral expenses
100,000
Judicial expenses
5,000
Loans from GSIS
80,000
Unpaid mortgage
70,000
Total
255,000
(390/2,000) x 255,000 49,72
5
Base 340,27
5
Rate 60%
Vanishing deduction 204,16
5

5. Conjugal Exclusive Total

Family home 4,600,0
00
Personal properties 400,00
0
Land 800,000
Building 500,000
Car ________ 900,00
0
Gross estate 5,000,00 2,200,00 7,200,000
0 0
Less: Deductions
Ordinary
Funeral expenses (maximum) 200,000
Judicial expenses 200,000
Unpaid mortgage, family home 150,000
Vanishing deduction _______ 997,500
Total 550,000 997,500 ( 1,547,500
)
Special
Family home, maximum ( 1,000,000
)
Standard deduction ( 1,000,000
)
Net estate 3,652,500
Less: Share of surviving spouse (5,000,000 550,000) x 2,225,000

Net estate subject to tax 1,427.500
22
 Schedule 1: Computation of Vanishing Deduction / Property previously taxed
Lower value:
Land P
600,000
Commercial building 500,000
Car 900,000
Total 2,000,000
Less: Mortgage paid 200,000
Initial basis 1,800,000
Less: Deductions (pro-rated) (1,800,000/7,200,000) x P 137,500
550,000
Base 1,662,500
Rate (more than 2 years, not more than 3 60%
years)
Vanishing deduction 997,500

6. a. Deductible
b. Not deductible
c. Not deductible
d. Not deductible
e. Deductible

7. Exclusiv Community Total

e
Personal properties 2,500,00 1,750,000
0
Family home 2,000,00
0
Real properties ________ 1,400,000
Gross estate 4,500,00 3,150,000 7,650,000
0
Ordinary deductions:
Funeral expenses, limit 200,000
Judicial expenses 30,000
Unpaid taxes 12,500
Losses 350,000 ( 592,500)
Special deductions:
Family home (1,000,000
)
Standard deduction (1,000,000
)
Medical expenses, limit ( 500,000
)
Net estate 4,557,50
0
Less: Share of surviving spouse (3,150,000 592,500) 1,278,750
/2
Net taxable estate 3,278,75
0

Computation of net distributable estate:

Exclusive Community Total
Personal properties 2,500,000 1,750,000
23
 Family home 2,000,000
Real properties ________ 1,400,000
Gross estate 4,500,000 3,150,000 7,650,00
0
Ordinary deductions:
Funeral expenses 220,000
Judicial expenses (30,000 + 20,000) 50,000
Unpaid taxes 12,500
Medical expenses 550,000
Losses (350,000 + 130,000) 480,000 (1,312,50
0)
Net estate 6,337,50
0
Less: Share of surviving spouse (3,150,0001,312,500)/ 2 918,750
Net distributable estate 5,418,750

8. Communit Exclusive Total

y
Gross estate 3,000,000 2,000,00 5,000,00
0 0
Less: Deductions
Ordinary
Unpaid mortgage (50,000 20,000) 30,000
Amount claimed as deduction 170,000
Vanishing deduction 384,000 ( 584,000
)
Special (Standard deduction) (1,000,00
0)
Net estate 3,416,00
0
Less: Share of surviving spouse
Gross conjugal 3,000,00
0
Less: Conjugal expenses 584,00
0
Net conjugal 2,416,00
0
Share (2,416,000 /2) 1,208,00
0
Net taxable estate 2,208,00
0

Computation of vanishing deduction:

Value to take 540,000
Less: Mortgage paid (20,000 + 40,000
20,000)
Initial basis 500,000
Less: Deductions (pro-rated)
Amount claimed 170,000
Unpaid mortgage (50,000 30,000
20,000)
Total 200,000
24
 (500,000 / 5,000,000) x 20,000
200,000
Base 480,000
Rate (more than 1 year, not more than 2 80%
years)
Vanishing deduction 384,000

9. a. Decedent was a resident / citizen

Gross estate, Philippines 2,000,00

0
Less: Expenses 300,00 1,700,0
0 00
Gross estate, United States 5,000,00
0
Less: Expenses 1,500,00 3,500,0
0 00
Total 5,200,0
00

Tax on P 5,000,000 465,000

200,000 x 15% 30,000
Estate tax due 495,000
Less: Tax credit
Tax paid, US 280,000
Limit (35/52 x 495,000) 333,173 280,000
Estate tax due after tax credit 215,000

b. Decedent was a nonresident alien.

A nonresident alien is not entitled to a tax credit of estate tax paid or payable
in a foreign country because such properties are not also taxable in the
Philippines.

10 Net taxable estate, Philippines 900,000

.
Gross estate, A foreign country 800,00
0
Deductions, A foreign country 200,00 600,00
0 0
Gross estate, B foreign country 500,00
0
Deductions, B foreign country (600,00 (100,00
0) 0)
Gross estate C foreign country 800,00
0
Deductions C foreign country 200,00 600,00 1,100,0
0 0 00
Total 2,000,0
00
Tax on P2,000,000 135,000
Less: Tax credit
Tax paid A foreign country 60,000
Limit (6/20 x 135,000) 40,500 40,500
Tax paid B foreign country 100,00
25
 0
Limit (6/20 x 135,000) 60,000 60,00
0
Total credits, 1st limitation 100,50
0
2nd limitation (11/20 x 74,25 74,250
135,000) 0
Estate tax payable 60,750

26