Taxation 2 │GROSS ESTATEExemptions from Gross Estate

FLABERT VILLASENCIO, CPANotre Dame of Dadiangas University

Learning Objectives

▪ Identify Transactions Exempted from Estate Tax

▪Determine the value of gross estate of with Transactions Excluded from Estate Tax.

EXEMPTIONS TO GROSS ESTATE

1. Merger of usufruct in the owner of the naked title.

Father Son A(usufruct)

Son B(Owner)

2. Transmission from fiduciary heir to the fideicommissary

Father Daughter A(first heir)

Son B(2nd heir)

EXEMPTIONS TO GROSS ESTATE

3. Second transfer as desired by the predecessor

Bill Gates

Pedro JuanWhen he get

married

EXEMPTIONS TO GROSS ESTATE

4. Donations to social welfare, cultural & charitable

• Provided that not more than 30% of gift was used for administration purposes.• Institution only that are duly accredited by Philippine council for NGO Certificate.

EXEMPTIONS TO GROSS ESTATE

5. Reciprocity clause

House & Lot in USAP5,000,000

Car in Philippine

sP1,000,00

0

Franchise in PhilippinesP1,000,000

Assuming that Justin Timberlake See Boo, an American and resident of General Santos City, died with the following properties, how much is her gross estate assuming that there is reciprocity in the country?

EXEMPTIONS TO GROSS ESTATE

6. Capital of Surviving spouse

• Property owned exclusively by the surviving spouse shall not form part of the gross estate of the decedent.• Exclusive property of husband is called capital, while of wife is paraphernal.

EXEMPTIONS TO GROSS ESTATE