TRANSFER TAX

These are taxes imposed upon the privilege of passing ownership of

property without any valuable consideration (Domondon, 2014).

Kinds of Transfer Taxes under the NIRC

1. Estate tax
2. Donor’s tax

TRANSFER TAX INCOME TAX

Tax on privilege to transfer Tax on privilege to earn income
property
Rates are lower Rates are higher
Estate tax - 5% to 20%
Individual income- 5 to 32%
Donor’s Tax - 2% to 15%

30% in case of stranger

After death of decedent During the lifetime of the donor.

Transfer takes place only between May take place between natural
natural persons and juridical persons

Are donations inter vivos and donations mortis causa subject to estate
taxes?

GR: Donations inter vivos are subject to donor's taxes while donations
mortis causa are subject to estate taxes.
EXCEPT:

If the transferor's control over the property donated inter vivos extends up
to the death of the donor, such transfers in contemplation of death,
revocable transfers, then these are subject to estate taxes

ESTATE TAX
An excise tax imposed upon the privilege of transmitting property at the time
of death and on the privilege that a person is given in controlling to a certain
extent the disposition of his property to take effect upon death.

NOTA BENE: The Estate Tax is based on the laws in force at the time of
death notwithstanding the postponement of the actual possession or
enjoyment of the estate by the beneficiary

Sec 84 still study considering the TRAIN LAW?

Change in TRAIN LAW

It is a national tax because it is imposed by the national government.

It is direct tax because the person
Before train law it is progressive now it is proportionate tax.

NOTE: Generally, the purpose of the estate tax is to tax the shifting of
economic benefits and enjoyment of property from the dead to the living.

Read Case of Lorenzo vs Posadas- Why tax the dead instead of the heirs.
Purposes in imposing the estate tax

1. To generate additional revenue for the government

2. To provide an avenue for the equal distribution of wealth; to reduce the
concentration of wealth
3. To compensate the government for the protection given to the decedent
that enabled him to prosper and accumulate wealth

Under the TRAIN LAW how much is the exempt?

Wala na even if 100,000 imong net estate 6% na gihapon

But those who died prior to TRAIN LAW use gihapon the table

DETERMINATION OF GROSS AND NET ESTATE

The value of the gross estate of the decedent shall be determined by

including the value at the time of his death of all property, real or personal,
tangible or intangible, wherever situated: Provided, however, That in the
case of a nonresident decedent who at the time of his death was not a citizen
of the Philippines, only that part of the entire gross estate which is situated
in the Philippines shall be included in his taxable estate (Sec. 85, NIRC).

Non Resident Citizen- within/without

Resident Alien- within/without
Resident Citizen- within/without
Non Resident Alien- Within lang
Foreign Corp.-
Should the land be included- should not be included in your gross estate-
even if ikaw naka name tapos you do not exercise ownership.

TRANSFER IN CONTEMPLATION OF DEATH

It is a transfer motivated by the thought of impending death although death
may not be imminent:

1. When the decedent has, at any time, made a transfer in contemplation of

or intended to take effect in possession or enjoyment at or after death; or

2. When decedent has, at any time, made a transfer under which he has
retained for his life or for a period not ascertainable without reference to his
death or any period which does not in fact end before his death:
a. Possession, enjoyment or right to income from the property; or
b. The right alone or in conjunction with any other person to designate the
person who will possess or enjoy the property or income there from.

The fear of death must have medical or scientifical basis-

Example: Naa kay cancer tapos may taning naka

Yes because the transfer is for viable reason

Sec. 85 MEMORIZE word for word-

General Power of Appointment

A B C

If sale it will not pass through general power of appointment

Life Insurance Policy

X y
Policy Holder Beneficiary

It is not included because if irrevocable shall not be included in the gross

estate of X
It is included if revocable sya

Only the difference is included in the gross estate but not the whole amount

Exclusive Conjugal Gross Estate

Land 1m 1m
Land 1m 500k

Non Resident Aliens- 500k standard deduction

Resident Alien and Citizen 5m standard deduction
Memorize the Requisites for each deduction

Special will not affect conjugal property

Pag ordinary sya sa conjugal sya ideduct

Limits-
Per Country Limitation
Per Global Limitation
Compare it to actual amount

Total NE 5m 300k
Phil NE 3m
Vietnam- NE 1m 200k 230,000
USA 1m 100k

Vietnam 1m/5m x 300k = 60,000

USA 1m/5m x 300k= 60,000

60,000+30,000= 90,000

2m/5m x 300,000= 120,000

Date of death valuation rule

1m time of death vs 1.2 m fair market value after= 1m

Any event that will happen after the death of the decedent will not affect the
valuation of the property.

What if a share of stock?

How to value if not listed in PSE? Book Value
For now we are following A