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(xxxx)
Final Basis
Multiply by Vanishing deduction rate (%)
Vanishing deduction
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The vanishing deduction rates is based on the period from receipt to decedent's death as follows: (1)
within 1 year-100%; (2) beyond 1 year to 2 years-80%; (3) beyond 2 years to 3 years-60%; (4) beyond 3
years to 4 years-40%; and (5) beyond 4 years to 5 years-20%.
PROCEDURE IN
COMPUTING THE
VANISHING
DEDUCTION:
a) Determine the
initial value of the
property previously
taxed; Rule - Value of
"Property previously
Taxed" in computing
the estate tax or
donor's tax of the
prior transfer or that
of the present
decedent's estate,
whichever is lower.
b) Deduct any
mortgage or lien on
the "Property
Previously Taxed" paid
by the present
decedent prior to his
death, where such
mortgage or lien was
a deduction from the
gross estate of the
prior decedent or gift
of the donor. This is
the "Initial Basis".
TOP c) The "Initial Basis" in Step (b) shall be further reduced by the
following ratio of the expenses, losses, indebtedness, taxes or
transfer for public purposes:
Initial Basis
------------- X
Gross estate
- 1 year - 100%
- 2 " - 80%
- 3 " - 60%
- 4 " - 40%
- 5 " - 20%
over - 0%
9,080,000
P5,920,000
--------------------------------
P 603,000
OF EXCESS
SHALL BE
PLUS
Exempt
Below P200,000
OVER
5%
P200,000
P15,000
8%
500,000
135,000
11%
2,000,000
465,000
15%
5,000,000
1,215,000
20%
10,000,000
Formula:
Phil. Gross Estate
------------------ X
World Gross estate
Expenses, losses
indebtedness & taxes