Transfer Taxes

  • Nature of Transfer Taxes
  • Estate Tax
    • Nature of Estate Tax
      • Definition – Sec 104, NIRC – includes real and personal properties, whether tangible or intangible, or mixed, wherever situated.
      • Rate of Tax (Sec 84) – 6% of net estate
      • The Law that governs the imposition of Estate Tax – (Sec. 3, RR 2-2003) – It is a well-settled rule that estate taxation is governed by the statute in force at the time of death of the decedent. The estate tax accrues as of the death of the decedent and the accrual of the tax is distinct from the obligation to pay the same. Upon the death of the decedent, succession takes place and the right of the State to tax the privilege to transmit the estate vests instantly upon death.
      • Is Estate Tax a Property Tax or Excise Tax?
        Separate Opinion of Justice Bersamin in CIR vs. Pilipinas Shell,
        GR No. 188497 dated February 19, 2014
    • Composition of the Gross Estate
      • Sec 104 NIRC – Definitions
      • Sec 5, RR 2-2003 – Valuation of Gross Estate
      • Who are subject to estate taxes?
        • Filipino citizens and resident aliens – on properties within and without the Philippines
        • Non-resident aliens – properties which at the time of his death were situated in the Philippines – (Sec 86 [B] NIRC – net estate of non-resident decedent, not a citizen of the Philippines)
          • Rule on Reciprocity
          • Rules on Intangible Personal Property
            • CIR vs. Campos Rueda (42 SCRA 23)
            • CIR vs. Fisher (1 SCRA 93)
      • Gross Estate (Secs. 85 and 104)
        • Valuation Rules (Sec. 5 of RR No. 2-03)
          • Real Property (Sec 88 NIRC)
          • Personal Property (applicability of RR No. 6-2013)
          • Shares of Stock
          • Usufruct (Sec 88 NIRC)
            • Decedent’s Interest
            • Transfer in Contemplation of Death
            • Revocable Transfer
            • Property Passing Under General Power of Appointment – Correlate with Sec. 87
            • Proceeds of Life Insurance
            • Prior Interest
            • Transfers for Insufficient Consideration
            • Capital of Surviving Spouse
    • Deductions Allowed to Estate (Sec. 86 NIRC)
      • Allowed to Residents and Citizens
        • Standard Deduction – P5,000,000
        • Claims against the Estate – Requisites for deductibility
          • Simple Loan
          • Unpaid obligation from purchase of goods
          • Court Settlement
            • Dizon vs. CTA (GR No. 140944 dated April 30, 2008)
        • Claims against insolvent persons
        • Unpaid Mortgages, Taxes and Casualty Losses
          • Rules
        • Property Previously Taxed (Vanishing Deductions)
          • Requisites for deductibility
          • Rationale for grant
        • Transfers for Public Use
        • Family Home – P10,000,000
        • Amount Received by Heirs Under Republic Act No. 4917
      • Allowed to Nonresident aliens (See also Sec. 86 D)
        • Limitation (Sec. 7 RR No. 2-03) Correlate with Sec. 86(D) on tax credits for estate taxes paid to foreign country
    • Exemption of certain acquisitions and transmissions (Sec 87)
    • Estate Tax Returns and Payment of Tax (Secs. 90 and 91)
      • When required and contents
      • Time of Filing / Extension of time to file
      • Place of Filing
      • Time of Payment / Extension of time to pay
      • CPA Certification
    • Other Matters
      • Who is liable to pay? [Sec. 91 (D)]
        Estate of Vda. De Gabriel vs. CIR (GR No. 155541 dated January 27, 2004)

        • Discharge of Executor or Administrator from Personal Liability (Sec. 92)
        • Liability of Heirs
          CIR vs. Pineda (21 SCRA 105)
      • Payment Before Delivery by Executor Sec. 94
        Marcos II vs. CA 273 SCRA 47
      • Duties of Certain Officers (Sec. 95)
      • Restitution of Tax Upon Satisfaction of Outstanding Obligations (Sec. 96)
      • Payment of Tax Antecedent to the Transfer of Shares, Bonds or Rights (Sec. 97)
        PNB vs. Santos, GR No. 208295 dated December 10, 2014
  • Donor’s Tax
    • Nature of Donor’s Tax
      Lladoc vs. Vs. CIR ( 14 SCRA 292)
    • Pirovano vs. CIR (14 SCRA 232)
      • Definition
      • Composition of Gross Gift (Secs. 98 and 104)
      • Tax Rate (Sec. 99[A]) – 6% of total gifts in excess of P250,000 exempt gift made during the calendar year
      • Contributions to a candidate, political party or coalition of parties for campaign purposes governed by Election Code (Sec. 99[B])
    • Composition of the Gross Gifts (Sec. 104)
      • Residents and Citizens
      • Non-resident alien
        • Rule on Reciprocity
        • Rules on Intangible Personal Property
      • Corporations
      • Valuation of Gifts made in property (Sec. 102)
      • Exemption of Certain Gifts (Sec. 101[A])
        • Residents and Citizens
        • Non-resident aliens
        • Corporations
    • Other Matters
      • Rule on Political Contributions [Sec. 99B] Secs. 13 and 14 RA No. 7166
        RR No. 7-2011 dated February 16, 2011
        RMC 30-2016 dated March 14, 2016
        Abello vs. CIR, GR No. 120721 dated February 23, 2005
      • Transfer for Less than adequate and full consideration (Sec. 100)
        – where property, other than real property, is transferred for less than an adequate and full consideration in money or money’s worth,….deemed a gift subject to donor’s tax; exception: if made in the ordinary course of trade or business …. will be considered as made for an adequate and full consideration in money or money’s worth.
        (RR No. 6-2008 on shares of stock as amended by RR 6-2013)
        Philamlife vs. SOF, GR No. 210987 dated November 24, 2014
      • Tax Credit for Donor’s Taxes paid to a Foreign Country [Sec. 101 (C)]
      • The Law that governs the imposition of Donor’s Tax (Sec. 11 RR No. 2-03)
      • Renunciation of share in the conjugal partnership or absolute community; and, hereditary estate (Sec. 11 RR No. 2-03)
      • Capacity to Buy
        Sps. Evono CTA EB Case No. 705 dated June 4, 2012
    • Filing and Payment of Returns (Sec. 103) / (Sec. 13 RR No. 2-03)
      • Requirements
      • Time and Place of Filing
      • Notice of Donation – Exemption from Donor’s Tax (Sec 13 [C], RR No. 2-03)

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