Estate Tax

I will share on this blog my materials that I used in my lectures and those resources that helped me in my journey to achieve my CPA dream.

Estate tax definition: it is a tax on the privilege of the decedent to transmit his estate at death to his lawful heirs or beneficiaries.

Composition of gross estate

  1. In the case of a citizen or resident alien decedent:
  2. Real property within and without the Phil.
  3. Tangible personal property within and without the Phil.
  4. Intangible personal property within and without the Phil.
  5. In the case of a non-resident alien decedent:
    1. Real property within the Phil.
    2. Tangible personal property within the Phil.
    3. Intangible personal property within the Phil., unless there is RECIPROCITY in which case it is not taxable.

Rules of Reciprocity

– -this rule applies to transmission of intangibles of non-resident alien decedent.  There is reciprocity if the foreign country of which the decedent was a citizen and resident at the time of his death:

  1. Did not impose a transfer tax; or
  2. Allowed similar exemption from transfer tax in respect of intangible personal property owned by citizens of the Phil. not residing in that foreign country.

When there is reciprocity, the transmission of intangibles located in the Phil. of a non-resident alien decedent is not subject to tax. When there is no reciprocity, the transmission of intangibles located in the Phil. of a non-resident alien decedent is subject to tax.

Properties considered as located in the Phil.

  1. Franchise which must be exercised in the Phil.
  2. Shares, obligations, or bonds issued by any corporation or sociedad anonima organized or constituted in the Phil. in accordance with its laws.
  3. Shares, obligations,  or  bonds  issued  by  any  foreign  corporation  eighty-five per centum  of  the business of  which is located in the Phil.
  4. Shares, obligations, or bonds issued by any foreign corporation if such shares, obligations, or bonds have acquired business situs in the Phil.
  5. Shares or rights in any partnership, business or industry established in the Phil.
  6. Any personal property, whether tangible or intangible, located in the Phil.

 Questions to Answer:

  1. Which of the following statements is wrong?
  • A. The gross estate of a non-resident citizen would include all properties regardless of location.
  • B. The gross estate of a non-resident, not citizen of the Philippines, would include intangible properties in the Philippines.
  • C. The gross estate of a resident, not citizen of the Philippines, would include all properties regardless of location.
  • D. The gross estate of a non-resident citizen of the Philippines would include only properties in the Philippines.

2. The personal properties of a non-resident, not citizen of the Philippines, would not be included in the gross estate if:

  • A. The intangible personal property is in the Philippines.
  • B. The intangible personal property is in the Philippines and the reciprocity clause of the estate tax law applies.
  • C. The tangible personal property is in the Philippines.
  • D. The personal property is  shares  of  stock  of  a domestic  corporation 90%  of whose business  is  in the Philippines.

For the correct answers,  I would like to invite you to join my exclusive groups of aspiring CPAs for my upcoming project “CPA Dream Academy”.CPA DREAM ACADEMY

CPA Mentor,

JONATHAN RUIZ CPA, MIB

 

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About PAM Academy Founder

Newbie Mentor and one of the influential author in the Philippines setting. His also the founder of PAM Academy and Developer of PAM PSE TRACKER application.
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