03 chapter 4 deductions from gross estate part 03
DESCRIPTION
Estate TaxTRANSCRIPT
Taxation 2 │DEDUCTIONS FROM GROSS ESTATE
FLABERT VILLASENCIO, CPANotre Dame of Dadiangas University
ORDINARY
SPECIAL
ExpensesLosses
IndebtednessTaxes
Transfer for public useAmount received by heir under RA 4917Vanishing deductionsShare of surviving spouse
Funeral
Judicial Claims against the estate
Claims against insolvent person
Family homeMedical ExpensesStandard deduction
Amount Received Under RA 4917
oRefers to the amount received by heirs as a retirement benefit of the decedentoTo be Deductible:oHas been in the service for the same
employer for at least 10 yearsoNot less than 50 years of ageoAvailed only once
Share of the Surviving Spouse
(Communal or Conjugal Properties Net Estate) x 50%
Special Deductions
1. Family HomeoThe dwelling house including the land to
where it is locatedoFMV of the Family Home (Gross
Estate)oFMV of the Family Home vs
1,000,000 (Deductions)oExcess subject to Estate TaxoExclusive Property taken up at
100%oConjugal Property taken up at 50%
Special Deductions
1. Family HomeIllustration:Residential Lot (Conjugal) 2,300,000Residential House (Exclusive) 800,000
How much is deductible?
Residential Lot 1,150,000Residential House 800,000Family Home 1,950,000Deductible 1,000,000
Special Deductions
2. Medical ExpenseoNot exceeding 500,000 can be claimedoIn excess of 500,000 can no longer be deductedoThe expenses must have been incurred within one year prior to death
Special Deductions
3.Standard DeductionoAmounts to 1,000,000oNo need of substantiationoAny Citizen and Resident
Allocations of Deductions
oIf the total amount exceeds the statutory limit, the basis is TOTAL AMOUNToIf no means to trace the deduction, the basis will be the total gross estate
Non Resident Alien Decedent
oAllowed DeductionsoELIToAllowable Deduction=
World ELIT x (PGE/TGE)
oTransfer for Public UseoVanishing Deductions
SEATWORK: (1/2
CW)4-35 4-42
4-36 4-43
4-38 4-44
4-39 4-45
4-40 4-46
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