7/25/2019 Estate Tax Illustration
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Problem:
X, married to Y on August 8, 1988, died on July 1, 2014 with the
following properties:
a !and donated to him "y his father "efore his marriage to Y,
#alued at $2,000,00
" %esidential "uilding a&'uired "efore marriage through his
own la"or, #alued at
& (ar donated to him "y his father during marriage, #alued
at $1,)00,000
d Apartment "uilidng a&'uired during marriage through his
own la"or, #alued at
e (ommer&ial "uilding whi&h he inherited from his
grandfather, who died on June
/he following are some of the dedu&tions from the
estate:
a uneral e.penses of $800,000
" +edi&al e.penses of $2,000,0000
Computation:
Gross Estate:
!and 2,000,00000
%esidential "uilding 1,000,00000(ar 1,)00,00000
Apartment "uilding *,000,00000
(ommer&ial "uilding 10,000,00000 1,)00,00000
Less: Deductions
uneral -.penses 200,00000
+edi&al e.penses 00,00000
Judi&ial e.penses
(laims against the estate
(laims against insol#ent persons
3npaid mortgages
3npaid ta.es
(asualty losses
/ransfers for pu"li& use
anishing dedu&tion ),14,44
5tandard dedu&tion 1,000,00000
amily 6ome 1,000,00000
5hare of the sur#i#ing spouse 1,00,00000 10,*4,44
Net Taxable Estate 7,254,54545
!ultipl" b" tax rate
Estate tax due
Tax credit
Estate tax pa"able
Vanishing Deduction:
Value of the Property (lesser amount between value at the time
of prior transfer and value
Less: Mortgage on the property paid by the decedent, if any
Initial basis
7/25/2019 Estate Tax Illustration
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Illustration 1:
et estate in the $hilippines
et estate in the 35
-state ta. paid in the 35
-state ta. in the $hilippines
$roportion of $hilippine -state /a. whi&h the estate in 35
"ears to his entire net estate
A&tual estate ta. paid to foreign &ountry
Tax credit allo%ed
&llustration 2:
Limit $: Per foreign country % (net estate per foreign
country&entire net estate) ! Phil' estate ta!
Limit : y total % (net estate all foreign countries&entire
net estate) ! Phil' state ta!
Limit A:
* ta! credit % min ( +&- ! +..,--- or +--,---)
/anada ta! credit % min (0&- ! +..,--- or --,---)
Total
Tax credit 'lo%er bet%een actual estate tax paid to (orei)n
countries and 'lo%er am
1 has an estate in the Philippines worth M and in the * worth +M
(assuming the values are net of allowable ded2e paid an estate ta!
in the * amounting to +--3' Is he liable to pay estate ta! in the
Philippines4
1 has an estate in the Philippines worth M, in the * worth +M
and in /anada worth 0M (assuming the values arallowable
deductions)' 2e paid an estate ta! in the * amounting to +--3 and
in /anada worth --3' Is he liable estate ta! in the
Philippines4
Limit B: min (+50&- ! +..,--- or (+--,---5--,---))
