CHAPTER 3-1 DISCUSSION QUESTIONS / PROBLEMS January 5, 2005 or ten years after his disappearance On January 5, 2005, the same date that he was presumed to be dead 3 a Nonresident alien ( with reciprocity) House and lot, Manila P2,000,000 b Nonresident alien (no reciprocity) House and lot, Manila Shares of stock, Philippine corporation Shares of stock, Hongkong Corporation with business situs Accounts receivable, Philippine debtor Proceeds of revocable life insurance Savings deposit, Manila Bank Gross estate P2,000,000 125,000 175,000 60,000 150,000 45,000 P2,555,000 a Nonresident alien (with reciprocity) No gross estate shall be subject to tax because all properties are intangible personal within the Philippines Only real properties and tangible personal properties within are included in the gross estate of a nonresident alien (with reciprocity) decedent b Nonresident alien (no reciprocity) Shares of stock, Po Lu Tan Corporation Bonds, Tsi Tsa Company Franchise, Philippines Gross estate P 225,000 60,000 200,000 485,000 3-2 DISCUSSION QUESTIONS / PROBLEMS No Since the account is opened under "and/or signatures" the presumption is that the bank deposits are jointly owned by the spouses This rule holds whether the conjugal partnership of gains or absolute community of property regime governs the spouses a The amount includible in the estate is the salary from September to 15 minus the five- day cash advance b Included because the rent income for August had already accrued before the death c The interest is already included although it has not yet been withdrawn d Not included because the decedent died before the date of record e Included, but limited to his interest in the co-ownership f Included He had already inherited the property even if he did not take possession because his uncle had predeceased him g The proceeds are included in the gross estate because the designation of the beneficiary is revocable a Yes, the salary had already accrued to Cathay Considerably, this is already part of her gross estate b The P5,000 benefit is includible in her gross estate because Cathay complied with the condition set by the employer a This is a case of a transfer in contemplation of death because (1) it was the thought of date that induced Mat Sr to donate the property, and (2) of the stipulation that Mat Takutin shall retain possession or enjoyment to the property until his death Hence, the transfer is subject to estate tax b Even if the transfer of possession and enjoyment had already been made, it is still a case of a transfer in contemplation of death Therefore, subject to estate tax a Yes In a revocable transfer, it is not necessary that the donor should exercise his reserved right to alter, amend, revoke or terminate the transfer What is important is that he had made such reservation which can be exercised anytime he wanted to b It does not change the nature of the transfer Whether the decedent has exercised the power of revocation or not, it shall always be a part of his estate a Yes, because it is a case of a revocable transfer In a life insurance, if the designation of the beneficiary is revocable, the proceeds thereof shall be part of the gross estate b The proceeds shall be excluded from the gross estate because the designation of the wife as beneficiary is irrevocable, provided that she is neither appointed as executor or administrator This is a case of a special power of appointment because Bakling, the trustee, cannot choose the person whom he wants to succeed to the property His power is restricted because the appointment is limited only to his children Therefore, the property shall not form part of his gross estate a Special power of appointment Baldomero is disqualified to appoint his creditor b General power of appointment There is no restriction on whomsoever he wants to appoint as his heir c Special power of appointment He is allowed only to appoint somebody from among the descendants of Alacamo d Special power of appointment up to 40% because he is allowed only to appoint his estate up to that extent General power of appointment on the balance of 60% because there is no restriction on whomsoever he wants to designate as heir 10 I will advise him that he should provide in his will the limitation on the persons to be appointed by Maatik as his heirs thereby making it a special power of appointment In which case, the transfer of the property from Maatik to his family will not be subject to estate tax Case Case Case a) FMV, time of transfer P 950,000 b) Consideration received -0c) FMV, time of death 1,000,00 Amount to be included in the Gross P1,000,00 Estate P 950,000 P 950,000 950,000 1,000,000 800,000 1,000,000 None P 200,000 Note: In Case 2, no amount is to be included in the gross estate because the property transferred for a full and adequate consideration 11 a The amount to be included in the gross estate of Sigurista is P450,000 (P750,000 - 300,000) b If the sale is discovered to be fictitious, the entire amount of P750,000 is to be included in the gross estate of Sigurista because there was actually no payment made to her at the time of sale 12 The action filed by Curiadora against Atacador will prosper The donation made by Bonador in favor of Atacador is a donation mortis causa due to a reservation of rights over the property in favor of Bonador Thus, the donation made during lifetime did not prosper There is also no donation mortis causa because in order to be effective, it must have been provided in the will of Bonador that the property is being donated mortis to Atacador 13 a The proceeds of life insurance shall only be excluded from the gross estate if the irrevocably designated beneficiary in the policy is not the estate of the deceased, his executor or administrator These requisites are not satisfied Therefore, the proceeds shall be part of the gross estate of Bokdoy b Even if the designation is irrevocable since the beneficiary named in the policy is his estate, the proceeds shall form part of the gross estate of Bokdoy c Since the problem does not clearly specify, it is presumed that Oyang is neither the executor nor the administrator However, if the designation is revocable the proceeds of the life insurance policy shall still be part of the gross estate, subject to estate tax It is shall only be exempt if (1) Oyang, the beneficiary, is not the estate, the executor or the administrator and (2) his designation as the beneficiary is irrevocable 14 Family home Car Jewelries Shares of stocks, Malakas Corp Proceeds of life insurance payable to estate Land (P450,000 – 150,000) Motorbike Apartment Gross estate Notes: 1,450,000 525,000 60,000 78,000 350,000 300,000 40,000 3,000,000 5,803,000 The condominium unit is under special power of appointment because of the restriction on the privilege of Mando to choose his heirs The motorbike is presumed to be transferred in contemplation of death because the date of sale and the date of death were relatively close The resthouse in Tagaytay is revocably transferred to him by his friend Therefore, it should be a donation mortis causa to him Considering that he was not named in the will, Mando is not the proper heir to the property The donation of the apartment was a revocable transfer Hence, its value should be included in his gross estate EXERCISE 3-3 For purposes of the corporation, there being no change in ownership of the questioned shares in its stock and transfer book, the rightful owner of the dividends would be the estate of the deceased Antero The corporation is bound, in so far as ownership of its shares is concerned, by its stock and transfer book, and as far as the questioned shares are concerned, their owner is still Antero, and it is therefore to his estate that the dividends should be paid Neither Banayo nor Corona would be entitled to the dividends ... 525,000 60,000 78,000 35 0,000 30 0,000 40,000 3, 000,000 5,8 03, 000 The condominium unit is under special power of appointment because of the restriction on the privilege of Mando to choose his heirs... in the will, Mando is not the proper heir to the property The donation of the apartment was a revocable transfer Hence, its value should be included in his gross estate EXERCISE 3- 3 For purposes... presumed to be transferred in contemplation of death because the date of sale and the date of death were relatively close The resthouse in Tagaytay is revocably transferred to him by his friend