03 chapter 4 deductions from gross estate part 03

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

#DO IT BY PAIR #SHOW YOUR SOLUTIONS

#WRITE THE LETTER AND THE ANSWER OF

YOUR CHOICE