Taxation 2

GROSS ESTATE
FLABERT VILLASENCIO, CPA

Notre Dame of Dadiangas University

Learning Objectives
Define gross estate

Identify components of gross estate

Determine the value of gross estate
Identify some additions to the gross
estate

Gross Estate
Consists of all property owned
by a decedent at the time of his
death excluding the exclusive
properties of the surviving
spouse

Components of Gross Estate

Real Properties
Immovable properties such as land,
building, resort, etc.

Personal Properties
Franchises, shares, obligations or bonds
issued by foreign corporation provided
that
85% is in the Philippines
It acquired business situs in the Philippines
It is established in the Philippines

Summary Components of Gross

Estate

Real Properties
Within
Without
Personal Properties

Tangible- within
Tangible-without
Intangible- within
Intangible- without

Resident/
Citizen

Non-resident

Non-resident

(no reciprocity)

(with reciprocity)

Vacation house in HK
Land in Zamboanga
House in Camarines
Apartment in NY
Car in HK
Car in Phils
Jewelries in NY
Franchise, NY
Franchise, HK
Franchise, Phils
A/R from Phils
A/R from NY
A/R from HK
Investment, NY
Investment, Phils
Investment, HK
Domestic Shares, Phils
Domestic Shares, New York
Foreign Shares, 90% in Phils
Foreign Shares, 30% in Phils
Foreign shares, 60% in Phils

.1,200,000
. 80,000
. 3,000,000
. 4,500,000
. 700,000
. 650,000
. 125,000
. 300,000
. 260,000
. 380,000
. 275,000
. 240,000
. 385,000
. 730,000
. 300,000
. 245,000
. 140,000
. 250,000
. 100,000
. 270,000
. 425,000

Compute for the gross estate: Resident or citizen, Non Resident (no reciprocity and with
reciprocity)

Answers
Resident/CitizenP14,555,000
Non-resident (no reciprocity)
4,925,000
Non-resident (with reciprocity)
3,730,000

Valuation of Gross Estate

Real & Personal Propertyo FMV at the time of death whichever is higher.
FMV of land P1,200,000

Cost of land 1, 000,000

FMV of BIR

1,400,000

What will be the valuation of the land?

Answer: FMV of BIR, P1,400,000

Stocks, bonds & other securities

o If Listed In PSE, get the average of highest and lowest of the
SP x shares.
o If not listed in PSE, for common stock-BV, for preferred
stock, par value

Additions to Gross Estate

1. Revocable Transfer
transfers of property with the retention or
reservation of rights over the property while he
still lives.
Land, P500,000
Subject to a right of
Revoke.

QUESTION: Upon death, is the transfer part of his GROSS ESTATE?

Additions to Gross Estate

2. Transfers in contemplation of death
properties that are not physically available in
the estate at the time of death in anticipation
of his death.

Property

QUESTION: Is the transfer part of his gross estate?

Additions to Gross Estate

3. Property passing under GPApower of appointment is the right to
designate by will or deed the person who will
received the property.
Property with a clause that
She is free to transfer it to anybody.

QUESTION: is the appointment part of his gross estate?

Additions to Gross Estate

4. Decedents Interestdividends, profits, proceeds in any
insurance, right of usufruct.

Additions to Gross Estate

5. Proceeds Of Life Insurance with
revocable beneficiary,
administrator or his executor.
P 1,500,000

QUESTION: is the proceeds part of his gross estate?

Additions to Gross Estate

6. Transfers for insufficient
consideration
Land of P1,500,000
For P200,000

QUESTION: is the transfer part of his gross estate? How much?

Additions to Gross Estate

7. Claims against insolvent
person
8. Amount received by heirs
under RA 4917