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Estate and Administrative

Estate Tax Law Provisions

Estate: Total property, rights, and obligations of a SUMMARY: Task - Deadline - Form(s) to use
person that are transferred at death. Filing Estate Tax Return - Within 1 year from the date of
National Internal Revenue Code (NIRC), as
amended by TRAIN Law:
Estate death - BIR Form No. 1801
Payment of Estate Taxes - At the time the return is filed -
BIR Form No.1801 & BIR Form No. 0605
Tax Rate: Flat rate of 6% on the net estate. Taxes Application of TIN of the Estate - At the time of filing - BIR
Form No.1904
Filing Requirements: Due within one year from the Application for Certificate Authorizing Registration (CAR)
decedent’s death. - After estate tax settlement - No specific form; documents
submitted to BIR
A surcharge of 25% is imposed on late filing or
2 failure to pay taxes within the due date, unless
Classification of granted extension.
Decedents & Composition
of Gross Estate 4
Computation of
Estate Tax Credit

Resident Citizen,
Non-Resident Citizen, -Personal Property, wherever situated 3
Resident Alien : -Intangible Property, wherever situated Formula for
Computation of Net Estate (Per foreign country)
Gross Estate Divided by: Entire Net Estate
-Real property situated in the Multiply by: Phil. Estate Tax
Philippines Gross Estate xxx Tax Credit
-Tangible personal property situated in Less: Deductions (xxx)
Non-Resident Alien: the Philippines Net Taxable Estate xxx The tax credit should be the lower
-Intangible personal property with situs Multiply by: Tax Rate 6% amount between the tax credit
in the Philippines, unless excluded on Estate Tax Due xxx limit as computed and the actual
the basis of RECIPROCITY
Less: Tax Credits (xxx) tax paid to the foreign country.
Estate Tax Still Due xxx
 6 8 Ordinary Deductions
Gross Estate Allowable 1.Losses - pertaining to casualty losses: storms,
Deductions shipwreck or other casualties, or from robbery
Transfer in Contemplation Inclusions theft or embezzlement;
of Death Provided that such losses: are not
compensated by insurance; have not been
2. Indebtedness or Claims claimed as a deduction for income tax purposes;
Death must be contemplated, thought of against the Estate (including incurred during the settlement period of the
death must be the impelling cause of mortgage payable) Claims estate; settlement period pertains to the period
transfer. Revocable Transfer Gross Estate - Not included prescribed by law to file and pay the estate tax,
Deduction - Amount deductible is which is, under the TRAIN Law, within one (1)
General rule: Added to gross estate. the amount enforceable at the
time of death year from the date of death.
Exception: In case of bona fide sale for an
adequate and full consideration in money Requisites For Deductibility : a.
or money’s worth.
Property transferred by the decedent
remains part of the estate if they kept the
power to change or revoke it at death or
Estate Adequate and full consideration
(AFC); b. Enforceable and valid
(EF); c. Good faith (GF); d. Existing
3. Claims Against Insolvent Person
For purposes of estate taxation, a judicial
declaration of insolvency is not required but:

Property Passing Under General

Power of Appointment
relinquished it near death.
This power is assumed to exist at death,
even if notice or action was required but not
Taxes at the time of death (ETD) e. Not
prescribed in reglementary
period (NPRD); f. Notarized (S-N)
a) The incapacity of the debtor to pay his
obligation should be proven;
b) The full amount owed by the insolvent must
taken. Adjustments are made for excluded g. Not condoned (NC); h. first be included in the decedent's gross estate
interests. Disposition of the proceed of and the amount uncollectible shall be allowed as
GPA means that the decedent must loan (C3yrs) a deduction; and
have power exercisable in favor of c) If the insolvent could only pay a partial amount,
himself, his estates or creditors the full amount owed shall be included in the
Transfer for insufficient gross estate, and the amount uncollectible shall
of his estate
consideration 4. Unpaid mortgage or indebtedness be allowed as a deduction.
on property
1. Bona fide sale: FMV @transfer = SP; FMV
@transfer > SP = 0 5. Taxes - that accrued prior to the death of the 6. Transfer for Public Use - in favor of the government
Proceeds of Life decedent, but remain unpaid, are also deductible for of the ‘Philippines or any of its political subdivisions thereof
Insurance 2. Less than adequate and full : FMV @transfer estate tax purposes. (e.g. barangay, province, city/municipality) for exclusively
< SP = included Under Sec. 86(A)(1)(e) of the NIRC, the following public purposes.
taxes are not deductible: (1) Income tax on income
General rule: Taxable received after death; (2) Property taxes that accrued
Exception: FMV @death
A third person is irrevocably designated Less: Consideration received after death; and (3) Estate tax
as beneficiary. Inclusion in GE Special Deductions
The proceeds/benefits come from SSS 7. Properties Previously Taxed or Vanishing 1.Standard Deduction - P5, 000, 000 for RC,
or GSIS. Deduction - It is an amount allowed to reduce the NRC, RA; P500, 000 for RA
3. No consideration received = FMV @death taxable estate of a decedent where a property 2. Family Home - Amount deductible should be
The proceeds come from group (inclusion)
insurance. included in his gross estate was previously received by the lower value between 10M and the value of
him, either: the FH.
1) From a prior decedent by way of inheritance; or 3. Amount Received by Heirs under RA 4917
1. Special Power of Appointment 2) From a donor by way of gift or donation
2. The merger of the usufruct in the owner of the naked title Note: When a decedent is married, the estate is
3. Transmission or Delivery of the inheritance or legacy of the fiduciary heir or legatee to the 7 generally subject to special deductions that apply
fideicommissary Net Share of Surviving Spouse to their share of the estate, particularly if they
4. The transmission from the first heir, legatee or donee in favor of another beneficiary, in Gross Estate amount deductible under this category were in a conjugal partnership or under a
accordance with the will of the predecessor. is the net share of the surviving spouse community property regime. In such cases, only
5. All bequests, devices, legacies or transfers to social welfare, cultural and charitable Exclusions
institutions provided that (1) no part of the the net income of inures to the benefit of a private in the conjugal partnership property. half of the conjugal or community property is
individual, (2) not more than thirty percent (30%) of the said bequests, legacies or transfers considered part of the decedent's estate for tax
shall be used by such institutions for administration purposes. purposes, while the other half belongs to the
surviving spouse.