CHAPTER 9 – CROSSWORD PUZZLE M I C N T A S S S U B A N G A N T B L E S T F D D L P I Y E A B T N E A D S X A Y R U N P A I D – DISCUSSION QUESTIONS/PROBLEMS Car Condominium unit (zonal value) Gross estate 1,300,000 1,950,000 3,250,000 The zonal value represents the fair market value per CIR which is higher than the assessed value of P1,325,000 The assessment made by the Commissioner is erroneous because the estate of a decedent shall be appraised at its fair market value as of the time of death The fair market value of the property at the time of Bagolbolan's death in 2005 was only P800,000, hence, it should be the proper basis of valuation for estate tax purposes Fair Market Value (124 + 121)/ x 3,500 Book value per share (P2,000,000 + 500,000)/20,000 x Shares owned by Sonia Fair market value 428,750 P 125 500 62,500 The estate tax imposed under the Code shall be paid by the executor or administrator before the delivery of the distributive share in the inheritance to any heir or beneficiary Where there are two or more executors or administrators, all of them are severally liable for the payment of the tax The estate tax clearance issued by the Commissioner or the Revenue District Officer (RDO) having jurisdiction over the estate, will serve as the authority to distribute the remaining/distributable properties/share in the inheritance to the heir or beneficiary The executor or administrator of an estate has the primary obligation to pay the estate tax but the heir or beneficiary has the subsidiary liability for the payment of 24 that portion of the estate which his distributive share bears to the value of the total net estate The extent of his liability, however, shall in no case exceed the value of his share in the inheritance a No, because the gross estate does not exceed P200,000 b Yes, because the gross value of the estate exceeds P200,000 c Yes Although the total value of the estate does not exceed P200,000 since it consists of a car which is a registrable property, an estate tax return must necessarily be filed a The deadline for the filing of an estate tax return on the estate of Batug is December 30, 2008 or six(6) months after his death b The latest date that the Commissioner can set in case he decides to grant extension of time for filing is January 29, 2002 or exactly 30 days after the lapse of the filing period c The heirs, executor or administrator should file the return with an authorized bank, or Revenue District Officer, or Collection Officer in Tabaco City a The deadline for payment of the estate tax of estate of Banul is November 3, 2008 or six (6) months after his death This is also the deadline for filing the estate tax return of the decedent b In case the Commissioner decides, he can grant extension of time for payment: Not to exceed years - in case the estate is settled judicially Not to exceed years - in case the estate is settled extrajudicially Estate tax due Add: Penalties Late filing and payment (205,200 x 25%) Interest (205,200 x 20% x 7/12) Estate tax payable P 205,200 51,300 23,940 280,440 EXERCISE 9-3 The last day for filing the return and payment of tax without any penalty is March 20, 2009 House and lot, Manila Cash, receivables, etc (700,000 + 15,000) Shares [(P0.55+P0.45) / 2] x 50,000 Shares, SMC Shares, ABB Land, Manila House, Quezon City Land Conjugal 2,000,0 00 715,000 25,00 Exclusive Total 40,000 45,000 100,000 1,175,000 _ 900,00 2,740,00 2,260,00 5,000,000 0 Gross estate Less: Deductions 25 Ordinary Funeral expenses (schedule 1) Loans, PNB Loans, SSS Income tax, Jan to September 190,000 30,000 20,000 23,000 20 Real estate tax 10,000 Bad debts 15,000 Unpaid mortgage, land, father(100,00040,000 60,000) Unpaid mortgage, land, mother (60,000– 35,000) Vanishing deduction (schedule _ 1) Total 328,000 25,000 669,168 694,168 Special Medical expenses (1,022,16 8) ( 45,00 0) (1,000,00 0) (1,000,00 0) 1,932,83 1,206,0 00 726,83 Family home (2,000,000 x ½) Standard deduction Net estate Less: Share of surviving spouse (2,740,000 – 328,000) x ½ Net taxable estate Tax on P500,000 226,832 x 8% Estate tax Add: Penalties (33,146.56 x 25%) Interest (33,146.56 x 20% x 7/12) Estate tax due Schedule 1: Funeral expenses Funeral service Other funeral expenses Burial plot and tombstone Total Schedule 2: Vanishing deduction 15,000.00 18,146.56 33,146.56 8,286.6 3,867.10 45,300.3 125,000 50,000 15,000 190,000 Mother’s estate P 45,000 10,000 50,000 835,000 Shares of stock, SMC Shares of stock, ABB Land, Manila House, Quezon City Total Less: Mortgage paid Initial basis Less: Deductions (900/5,000) x 353,000 26 Present Lower estate value P P 40,000 40,000 45,000 10,000 100,000 50,000 1,175,000 835,000 935,000 35,000 900,000 63,540 Base Rate Vanishing deduction 836,460 80% 669,168 The executor, administrator or any of the heirs are given two (2) months from the time of death of the decedent to file notice of death to the BIR Hence, they have until November 20, 2008 to file said notice Yes, because the value of the gross estate is P5,000,000 which is more than P2,000,000 27 ... is March 20, 20 09 House and lot, Manila Cash, receivables, etc (700,000 + 15,000) Shares [(P0.55+P0.45) / 2] x 50,000 Shares, SMC Shares, ABB Land, Manila House, Quezon City Land Conjugal 2,000,0... Penalties Late filing and payment (205,200 x 25%) Interest (205,200 x 20% x 7/12) Estate tax payable P 205,200 51,300 23 ,94 0 280,440 EXERCISE 9- 3 The last day for filing the return and payment of tax... 15,000 Unpaid mortgage, land, father(100,00040,000 60,000) Unpaid mortgage, land, mother (60,000– 35,000) Vanishing deduction (schedule _ 1) Total 328,000 25,000 6 69, 168 694 ,168 Special Medical