Taxes, Indebtedness, Losses and Claims
Statement of Disposition of Loan
(TILC) (January 28, 2019)
1. Claims Against the Estate – debts or
demands of a pecuniary nature which
could have been enforced against the
deceased in his lifetime and could have
been reduced to simple money
judgments.
Requisites for deductibility:
a. Personal obligation of the deceased
existing at the time of his death.
b. Contracted in good faith.
c. Must be a valid debt or claim.
d. Must not have been condoned.
e. Duly substantiated with evidence.
Amount Deductible: Reasonable
certain in amount.
NOTE:
Allowed for RC/NRC/RA
Allowed for NRA based on Pro-rata deductions
Deducted from common or exclusive property.
2. Claims against the Estate for Simple
Loans, Advances, arising from purchase
of goods or services.
Signatory of Sworn Certification –
must not be a relative of the borrower
within the fourth civil degree, either by
consanguinity or affinity.
Exception: If lender or signatory is within
4th degree, PN or other evidence of
indebtedness must be filed with the
Regional District Office (RDO) having
jurisdiction over the borrower within 15
days from the execution thereof.
3. Claims against the estate for loans
contracted within three (3) years before
death of decedent.
Additional Requisites for
Deductibility:
a. Notarized
b.
Proceeds submitted by administrator
or executor.
NOTE:
Allowed for RC/NRC/RA
Allowed for NRA based on Pro-rata deductions
Deducted from common or exclusive property.
4. Claims against Insolvent Person
Requisites for deductibility:
a. Value of claims included in the gross
estate.
b. Incapacity of the debtors to pay their
obligation is proven by a competent
body.
Amount Deductible: Claims the are not
collectible.
NOTE:
Allowed for RC/NRC/RA
Allowed for NRA based on Pro-rata deductions
Deducted from common or exclusive property.
5. Unpaid Mortgage
Requisites for deductibility:
a. Fair Market Value (FMV), without
deducting mortgage indebtedness,
initially included in the Gross Estate
(GE).
b. Mortgage indebtedness contracted in
good faith and for an adequate and
full consideration.
Amount Deductible: Amount of unpaid
Mortgage.
NOTE:
Allowed for RC/NRC/RA
Allowed for NRA based on Pro-rata deductions
Deducted from common or exclusive property.
6. Unpaid Taxes – represents taxes the
decedent was subjected to while still
alive but remained unpaid up to the time
of his death.
Requisites for deductibility:
a. Accrued of incurred prior to death of
decedent.
b. Enforceable against decedent at time
of death.
 What taxes are deductible? tax). The purpose is to minimize the
effect of double taxation within a short
Income taxes, real estate or property
period of time since the same property
taxes due at the time of death which were
will be again subjected to tax in the form
unpaid as of the time of death.
of estate tax.
NOTE:
Allowed for RC/NRC/RA Requisites for deductibility:
Not allowed for NRA based (RA 10963)
a. Death of a decedent
Deducted from common or exclusive property.
b. Identity of property
7. Casualty Loss – includes all loss arising
c. Inclusion of the tax property in the GE
from fire, storms, shipwreck or other
of the prior decedent.
casualties, or from robbery, theft or
d. Previously taxed
embezzlement.
e. No previous vanishing deduction
Requisites for deductibility: PERIOD DEDUCTION
a. Should arise from fire, storm, theft, 1 year or less 100%
robbery, embezzlement, shipwreck or
1 year – 2 years 80%
other forms of casualties.
b. Not compensated by insurance or 2 years – 3 years 60%
otherwise. 3 years – 4 years 40%
c. Not claimed as deduction in the ITR. 4 years – 5 years 20%
d. Occurred during the settlement of the
estate and before the last day of
payment of estate tax. Formula for Vanishing Deductions
NOTE: Initial Value XXX
Allowed for RC/NRC/RA FMV @ DDT/DOD
Not allowed for NRA based (RA 10963) Less: Mortgage Paid (XXX)
Deducted from common or exclusive property. Initial Basis XXX
8. Transfer for Public Use – amount of all Less Pro-rata Deduction:
bequests, legacies, devises, or transfers IB/GE (TILC + TPU) (XXX)
to or for the use of the Government of the Final Basis XXX
Philippines or any political subdivision
thereof, for exclusive public purposes.
NOTE:
Allowed for RC/NRC/RA and NRA
Requisites for deductibility: Deducted from common or exclusive property.
a. Transfer must be testamentary to SPECIAL DEDUCTIONS
take effect after death.
b. Value of the property must be 1. Family Home – is the dwelling house,
included in the Gross Estate (GE). including the land on which it is situated,
where the husband and wife, or a head
Amount Deductible: Full amount of the of the family, and the members of their
property transferred is deductible. family reside.
NOTE: The family home is deemed constituted
Allowed for RC/NRC/RA and NRA
Deducted from common or exclusive property.
on the house and lot from the time it is
9. Vanishing Deductions – allowed for actually occupied as a family residence
properties which were already subjected and is considered as such for as long as
to transfer taxes (e.g., estate and donor’s any of its beneficiaries actually resides
therein.
 Requisites for deductibility: NET TAXABLE ESTATE and ESTATE TAX
a. Must be the actual residential home Gross Estate XXX
of decedent and his family. Less: Allowable Deductions
b. Certified by the barangay Captain of Ordinary Deductions (XXX)
the locality Special Deductions (XXX)
c. Total value of FH included in GE Net Estate XXX
Less: Share of SS (SSS) (XXX)
Amount Deductible: Full amount Net Taxable Estate XXX
included in the GE or Limit ( whichever is
lower).
Estate Tax Rate (RA 10963): Fixed at 6%
NOTE:
Allowed for RC/NRC/RA
2. Standard Deductions – a deduction shall
be allowed as an additional deduction
without need of substantiation.

Amount deductible: Full amount shall

be allowed as deduction for the benefit of
the decedent.

RC/NRC/RA – P5,000,000.00
NRA - P500,000.00
3. Amount Received by heirs under RA
4917 – any amount received by the heirs
from the decedent’s employer as a
consequence of the death of the
decedent-employee.

Requisites for deductibility: Amount is

included in Gross Estate (GE).

Amount deductible: Any amount

received by heirs from decedent’s
employer as a consequence of the death
of employee-decedent.
NOTE:
Allowed for RC/NRC/RA
Share of the Surviving Spouse
After deducting the allowable deductions (only
the ordinary deductions) appertaining to the
conjugal or community properties included in
the gross estate, the share of the surviving
spouse must be removed to ensure that only the
decedent’s interest in the estate is taxed.
Amount Deductible: ½ of net
conjugal/community properties.