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1. Estate, defined mass of all the property, rights and obligations of a person that
are not extinguished upon his death including those that have accrued thereto since
the opening of the succession.
2. Kinds of Estate for Tax Purposes
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XXXXXXX
XXXXXXX
Php XXXXXXXXXX
50,000
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i.
ii.
iii.
iv.
Ordinary trust the income and corpus of the trust do not revert to the
grantor. The trust income is accumulated and held for distribution to the
beneficiaries.
Revocable trust a kind of trust in which the power to revest in the grantor
title to any part of the corpus of the trust is vested in the grantor himself or
in any person not having any substantial adverse interest in the trust corpus
or in its income.
Irrevocable trust irrevocable both as to corpus and as to income. Taxed
exactly like an estate under judicial settlement.
Employees trust
A trust where the income is accumulated or held for future distribution under
the terms of a will or trust;
A trust where the income is to be distributed currently by the fiduciary to the
beneficiaries;
A trust where the income collected by a guardian of an infant is held or
distributed as the court may direct.
ii.
Where, at any time, the power to revest in the grantor title to any part of the
corpus of the trust is vested in the grantor either alone or in conjunction with
any person not having a substantial adverse interest in the disposition of
such part of the corpus or the income therefrom; or
In any person not having a substantial adverse interest in the disposition of
such part of the corpus or the income therefrom.
depending upon the amounts which are properly paid or credited to the
beneficiary)
e. The distribution of income during the taxable year to the beneficiaries of the
trust is deductible from the taxable income of trust.
14. Rules on Taxability of Trust
15. Taxable Trust
a. When Income of the Trust is Taxable to the Grantor
i.
ii.
iii.
iv.
If the trust is revocable, the income of such trust which may be revested to
the granted is taxable to the grantor.
If the income of the trust, in whole or in part, that is held or distributed for
the benefit of the grantor is taxable to the grantor.
A trust, under which the grantor remains in control of the estate and/or
income, is a scheme intended to avoid payment of income tax. Thus, the
income that may be revested in the grantor, or held or distributed for the
benefit of the grantor shall be included in computing the taxable income of
the grantor.
If the income of the trust is applied to the payment of premiums upon such
policies of insurance on the life of the grantor, the said income is taxable to
the grantor.
ii.
iii.
iv.
iv.
The employees trust must form part of a pension, stock bonus or profitsharing plan of an employer for the benefit of some or all of his employees;
Contributions are made to the trust by such employer, or employees, or
both;
The contributions are made for the purpose of distributing to such
employees the earnings and principal of the fund accumulated by the trust
in accordance with such plan;
Under the trust instrument, it is impossible, at any time prior to the
satisfaction of all liabilities with respect to employees under the trust, for
any part of the corpus or income to be used for, or diverted to, purposes
other than for the exclusive benefit of the employees.