Transfer and business taxes by ampongan 6th sol man 9

CHAPTER 9
9 – 1. CROSSWORD PUZZLE
M

1

I

C
N

T

3

2

A

S

S

S

U
B

6

A

N

G

8

A

N

T

B

L

E

S

4

T
F
D

D

L

P

I

Y

5

E

A
B

T

7

N

E

A

D

S

X

A

Y

R
U

9

N

P

A

I

D

9 – 2. DISCUSSION QUESTIONS/PROBLEMS
1.

Car
Condominium unit (zonal value)
Gross estate

1,300,000
1,950,000
3,250,000

The zonal value represents the fair market value per CIR which is higher than the

assessed value of P1,325,000.
2.

The assessment made by the Commissioner is erroneous because the estate of a
decedent shall be appraised at its fair market value as of the time of death.
The fair market value of the property at the time of Bagolbolan's death in 2005
was only P800,000, hence, it should be the proper basis of valuation for estate tax
purposes.

3.
4.

5.

Fair Market Value (124 + 121)/ 2 x 3,500
Book value per share (P2,000,000 +
500,000)/20,000
x Shares owned by Sonia
Fair market value

428,750
P
125
500
62,500

The estate tax imposed under the Code shall be paid by the executor or administrator
before the delivery of the distributive share in the inheritance to any heir or
beneficiary. Where there are two or more executors or administrators, all of them are
severally liable for the payment of the tax. The estate tax clearance issued by the

Commissioner or the Revenue District Officer (RDO) having jurisdiction over the
estate, will serve as the authority to distribute the remaining/distributable
properties/share in the inheritance to the heir or beneficiary.
The executor or administrator of an estate has the primary obligation to pay the
estate tax but the heir or beneficiary has the subsidiary liability for the payment of

24


that portion of the estate which his distributive share bears to the value of the total
net estate. The extent of his liability, however, shall in no case exceed the value of his
share in the inheritance.
6.

a. No, because the gross estate does not exceed P200,000.
b. Yes, because the gross value of the estate exceeds P200,000.

c. Yes. Although the total value of the estate does not exceed P200,000 since it
consists of a car which is a registrable property, an estate tax return must
necessarily be filed.
7.

a. The deadline for the filing of an estate tax return on the estate of Batug is
December 30, 2008 or six(6) months after his death.
b. The latest date that the Commissioner can set in case he decides to grant
extension of time for filing is January 29, 2002 or exactly 30 days after the lapse of
the filing period.
c. The heirs, executor or administrator should file the return with an authorized bank,
or Revenue District Officer, or Collection Officer in Tabaco City.

8.

a. The deadline for payment of the estate tax of estate of Banul is November 3, 2008
or six (6) months after his death. This is also the deadline for filing the estate tax
return of the decedent.
b. In case the Commissioner decides, he can grant extension of time for payment:
Not to exceed 5 years - in case the estate is settled judicially.
Not to exceed 2 years - in case the estate is settled extrajudicially.

9.

Estate tax due
Add: Penalties
Late filing and payment (205,200 x
25%)
Interest (205,200 x 20% x 7/12)
Estate tax payable

P 205,200
51,300
23,940
280,440

EXERCISE 9-3
1.

The last day for filing the return and payment of tax without any penalty is March 20,
2009.

2.

House and lot, Manila
Cash, receivables, etc. (700,000 + 15,000)
Shares [(P0.55+P0.45) / 2] x 50,000
Shares, SMC
Shares, ABB
Land, Manila
House, Quezon City
Land

Conjugal
2,000,0
00
715,000
25,00
0

Exclusive

Total

40,000
45,000
100,000
1,175,000
_________
900,00
0
2,740,00 2,260,00 5,000,000
0
0

Gross estate
Less: Deductions

25


Ordinary Funeral expenses (schedule 1)
Loans, PNB
Loans, SSS
Income tax, Jan. 1 to September

190,000
30,000
20,000
23,000

20
Real estate tax
10,000
Bad debts
15,000
Unpaid mortgage, land, father(100,00040,000
60,000)
Unpaid mortgage, land, mother (60,000–
35,000)
Vanishing deduction (schedule
_______
1)
Total

328,000

25,000
669,168
694,168

Special Medical expenses

(1,022,16
8)
(

45,00
0)
(1,000,00
0)
(1,000,00
0)
1,932,83
2
1,206,0
00
726,83
2

Family home (2,000,000 x ½)
Standard deduction
Net estate
Less: Share of surviving spouse (2,740,000 – 328,000) x ½
Net taxable estate

Tax on P500,000
226,832 x 8%
Estate tax
Add: Penalties (33,146.56 x 25%)
Interest (33,146.56 x 20% x 7/12)
Estate tax due
Schedule 1: Funeral expenses
Funeral service
Other funeral expenses
Burial plot and tombstone
Total
Schedule 2: Vanishing deduction

15,000.00
18,146.56
33,146.56
8,286.6
4
3,867.10
45,300.3 0
125,000
50,000
15,000
190,000

Mother’s
estate
P
45,000
10,000

50,000
835,000

Shares of stock, SMC
Shares of stock, ABB
Land, Manila
House, Quezon City
Total
Less: Mortgage paid
Initial basis
Less: Deductions (900/5,000) x
353,000

26

Present
Lower
estate
value
P P 40,000
40,000
45,000
10,000
100,000
50,000
1,175,000 835,000
935,000
35,000
900,000
63,540

Base
Rate
Vanishing deduction

836,460
80%
669,168

3.

The executor, administrator or any of the heirs are given two (2) months from the time
of death of the decedent to file notice of death to the BIR. Hence, they have until
November 20, 2008 to file said notice

4.

Yes, because the value of the gross estate is P5,000,000 which is more than
P2,000,000.

27