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GLOSSARY OF TERMS CHAPTER 4-DEDUCTIONS FROM GROSS ESTATE 1.

DEDUCTIONS FROM GROSS ESTATE -ITEMS W/C THE LAW ON ESTATE TAX ALLOWS TO BE SUBTRACTED FROM THE VALUE OF THE GROSS ESTATE IN ORDER TO ARRIVE AT THE NEXT TAXABLE ESTATE; PRESUMED TO BE CONJUGAL DEDUCTIONS 2. ORDINARY DEDUCTIONS -DEDUCTIONS THAT ARE COMPRISED OF ELIT AND EXEMPTIONS 3. ELIT -THOSE ITEMS W/C WILL ACTUALLY REDUCE THE TAXABLE ESTATE AS WELL AS THE AMOUNT OF DISTRIBUTABLE ESTATE TO THE HEIRS; THEY ARE EXPENSES, LOSSES, INDEBTEDNESS AND TAXES NAMELY: FUNERAL EXPENSES JUDICIAL EXPENSES CLAIMS AGAINST THE ESTATE CLAIMS AGAINST THE INSOLVENT PERSONS UNPAID MORTGAGE, TAXES AND CASUALTY LOSSES

4. EXEMPTIONS -SPECIFIC ITEMS THAT ARE REQD TO BE INCLUDED AS PART OF THE GROSS ESTATE BUT ARE EXEMPTED FROM ESTATE TAX, NAMELY: TRANSFER FOR PUBLIC USE AMOUNT RECD BY AIR UNDER RA 4917 VANISHING DEDUCTIONS SHARE OF SURVIVING SPOUSE

5. SPECIAL DEDUCTIONS -DEDUCTIONS THAT ARE CATEGORICALLY PERMITTED BY LAW AS ALLOWANCE TO REDUCE THE TAXABLE ESTATE, NAMELY: STANDARD DEDUCTION MEDICAL EXPENSE (PAID AND UNPAID) FAMILY HOME

6. FUNERAL EXPENSES -EQUAL TO THE ACTUAL EXPENSES INCURED OR 5% OF THE GROSS ESTATE, WHICHEVER IS LOWER, BUT IN NO CASE TO EXCEED P200,000; ACTUAL EXPENSES INCURRED IN CONNECTION WITH THE INTERMENT OR BURIAL OF THE DECEASED 7. JUDICIAL EXPENSES -ALLOWED DEDUCTIONS INCURRED FOR THE ADMINISTRATION , INVENTORY TAKING OF ASSETS, AND SETTLEMENT OF THE ESTATE; S/B INCURRED DURING THE SETTLEMENT OF THE ESTATE BUT NOT BEYOND THE LAST DAY PRESCRIBED BY LAW , OR THE EXTENSION THEREOF, FOR THE FILING OF ESTATE TAX RETURN EXAMPLES: FEES OF EXECUTOR OR ADMINISTRATOR ATTORNEYS FEES COURT FEES ACCOUNTANTS FEES CLERK HIRE COSTS OF PRESERVING AND DISTRIBUTING THE ESTATE COSTS OF STORING OR MAINTAINING PROPERTY OF THE ESTATE; AND BROKERAGE FEES FOR SELLING PROPERTY OF THE ESTATE

8. CASUALTY LOSSES -ALL LOSSES INCURRED DURING THE SETTLEMENT OF THE ESTATE ARISING FROM THEFT, ROBBERY, EMBEZZLEMENT, FIRE, SHIPWRECK, STORMS AND OTHER CALAMITIES 9. CLAIMS AGAINST THE ESTATE -MEAN DEBTS OR DEMANDS OF A PECUNIARY NATURE W/C COULD HAVE BEEN ENFORCED AGAINST THE DECEASED IN HIS LIFETIME AND COULD HAVE BEEN REDUCED TO SIMPLY MONEY JUDGMENTS 10. UNPAID MORTGAGES -UNPAID INDEBTEDNESS SECURED BY DEBTORS PROPERTY , CONTRACTED IN GOOD FAITH AND FOR AN ADEQUATE AND FULL CONSIDERATION IN MONEY OR MONEYS WORTH

11. CLAIMS AGAINST INSOLVENT PERSONS -RECEIVABLES LEFT BY THE DECEDENT BUT THE COURT CONSEQUENTLY FOUND THE RELATED DEBTOR INSOLVENT 12. UNPAID TAXES -TAXES INCURRED PRIOR TO THE DATE OF THE DECEDENTS DEATH AND REMAIN UNPAID AS OF THE DATE OF DEATH; EXAMPLES ARE: PROPERTY TAXES ACCRUED PRIOR TO DECEDENTS DEATH UNPAID TAXES ON INCOME RECD BY DECEDENT BEFORE HIS DEATH GIFT TAXES ON LIFETIME GIFTS UNPAID UPON DEATH EXCISE OR TRANSFER TAX IN CONNECTION W/ EITHER A NECESSARY SALE OF ESTATE ASSETS OR A DISTRIBUTION IN KIND

13. TRANSFER FOR PUBLIC USE -AMOUNT OF ALL BEQUESTS, LEGACIES, DEVISES OR TRANSFERS TO OR FOR THE USE OF THE GOVT, OR ANY POLITICAL SUBDIVISION THEREOF; S/B USED EXCLUSIVELY FOR PUBLIC PURPOSES 14. PROPERTY PREVIOUSLY TAXED -AKA VANISHING DEDUCTION, THIS IS AN AMOUNT ALLOWED AS DEDUCTION FOR PROPERTY W/C WAS PREVIOUSLY TAXED WITH TRANSFER TAX (ESTATE TAX OR DONORS TAX) PRIOR TO THE DECEDENTS DEATH 15. SHARE OF THE SURVIVING SPOUSE -THE NET SHARE OF THE SURVIVING SPOUSE IN THE CONJUGAL OR COMMUNAL PROPERTY, NET OF THE OBLIGATIONS PROPERLY CHARGEABLE THEREIN 16. STANDARD DEDUCTION -TO ARRIVE AT NET ESTATE, A STANDARD DEDUCTION OF P1,000,000 IS ALLOWED IN ADDITION TO OTHER ALLOWABLE DEDUCTIONS

17. MEDICAL EXPENSES -AS A DEDUCTION FROM GROSS ESTATE, THIS REPRESENTS MEDICAL EXPENSES (COST OF MEDICINES, HOSPITAL BILLS, DOCTORS FEES, ETC) ACTUALLY INCURRED W/ A MAXIMUM AMOUNT OF P500,000 18. FAMILY HOME -THIS REFERS TO AN AMOUNT EQUIVALENT TO THE CURRENT FAIR MARKET OR ZONAL VALUE OF THE DECEDENTS FAMILY HOME, W/C SHALL NOT EXCEED P1,000,000 ALLOWED BY LAW TO BE DEDUCTED FROM GROSS ESTATE

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