This document discusses estate tax theories and the nature of transfer taxes. It defines estate tax as a tax imposed on the act of transmitting one's property to another for free upon death. Transfer taxes include estate tax and donor's tax imposed on inter vivos donations. Justifications for transfer taxes include the redistribution of wealth, benefits received by the recipient from government services, and the ability of heirs to pay tax on inherited wealth. The document also defines key concepts related to succession like compulsory heirs, voluntary heirs, intestate heirs, and disinheritance.
This document discusses estate tax theories and the nature of transfer taxes. It defines estate tax as a tax imposed on the act of transmitting one's property to another for free upon death. Transfer taxes include estate tax and donor's tax imposed on inter vivos donations. Justifications for transfer taxes include the redistribution of wealth, benefits received by the recipient from government services, and the ability of heirs to pay tax on inherited wealth. The document also defines key concepts related to succession like compulsory heirs, voluntary heirs, intestate heirs, and disinheritance.
This document discusses estate tax theories and the nature of transfer taxes. It defines estate tax as a tax imposed on the act of transmitting one's property to another for free upon death. Transfer taxes include estate tax and donor's tax imposed on inter vivos donations. Justifications for transfer taxes include the redistribution of wealth, benefits received by the recipient from government services, and the ability of heirs to pay tax on inherited wealth. The document also defines key concepts related to succession like compulsory heirs, voluntary heirs, intestate heirs, and disinheritance.
This document discusses estate tax theories and the nature of transfer taxes. It defines estate tax as a tax imposed on the act of transmitting one's property to another for free upon death. Transfer taxes include estate tax and donor's tax imposed on inter vivos donations. Justifications for transfer taxes include the redistribution of wealth, benefits received by the recipient from government services, and the ability of heirs to pay tax on inherited wealth. The document also defines key concepts related to succession like compulsory heirs, voluntary heirs, intestate heirs, and disinheritance.
Download as DOCX, PDF, TXT or read online from Scribd
Download as docx, pdf, or txt
You are on page 1of 3
ESTATE TAX THEORIES REVIEWER 2.
Estate tax- transfer is effected upon death of
the owner of property or imposed on Republic Act No. 8424- National Internal Revenue donation mortis causa Code of the Philippines Inter-vivos transfer- the property is transferred Excise tax- a regulatory tax imposed on the during the lifetime of the donor and donee, and is enjoyment of a privilege, performance of an act, or effected upon the delivery and acceptance of the engagement to an occupation property donated Business tax- tax imposed on the right of privilege to Mortis-causa transfer- the right to succession is engage in an onerous transfer of goods or services in effected from the moment of the decedent’s death the normal conduct of business Onerous transfer- sale or exchange of property for a Transfer tax- tax imposed on one’s right to make monetary consideration or a transfer of goods or casual and gratuitous transfer of one’s property to services in return for something of equal value the other person Onerous transfer may be made through: Documentary stamp tax- imposed on the right to enter into a transaction that is described in the 1. Regular business activities- sales or document needed to be filed in any government office exchanges in the ordinary course of business are usually imposed of business taxes such as Nature of Transfer Taxes is expressed in the ff: VAT, OPT, and excise tax 1. Estate tax- not imposed on the value or the 2. Casual sale of property- done by a person not property itself but on the act of transmitting engaged in business of selling property and is one’s property to another for free subject to capital gains tax or regular income 2. Irregular payments- not usually paid at tax regular intervals Gratuitous transfer- conveyance of property which is 3. Direct tax- imposed on the property left by not conditioned or reciprocated by any consideration the decedent or donor transmitting the in exchange for the value of the property given away property, not on the recipient of the property 4. National tax- collected by the BIR Justification of Transfer Taxes 5. Fiscal- help to increase the revenue of the 1. Redistribution of wealth theory- properties government are given for free contributes to the unequal 6. Compensation tax- intended to be distribution of wealth and earnings because redistributed in the form of governmental the recipient has not actually worked for it projects for the general welfare 2. Benefit-received theory- the government 7. Ad valorem tax- tax imposed are based on the protects and provides services in the fair market values of the property at the time accumulation of properties transferred of death or the time of donation gratuitously that resulted to benefits received 8. Progressive tax- tax imposed are graduated by the estate and the recipient or schedular tax 3. Privilege or state partnership theory- asserts 9. Subject to exemption- subject to conditions that the State is a passive and silent partner in prescribed by law, all grants, endowments, the accumulation of wealth as it protects donations, or contributions used actually, every individual within its territory directly, and exclusively for educational 4. Ability-to-pay theory- every inheritance purposes shall be exempt from tax received by an heir is in the nature of 10. Returnable- required to be reported using the unearned wealth and the effect of inheritance prescribed from tax return provided by the increases the wealth of the heir thereby BIR creating an ability to pay the tax and thus Classification of Transfer Tax contributing to governmental income 5. Equitable recoupment theory- prevent unjust 1. Donor’s tax- during the lifetime of the donor enrichment by either the taxpayer or the or imposed on donation inter vivos government Ownership may be acquired through: Classification of successors Occupation 1. Compulsory heirs- those who succeed by Intellectual creation force of law to some portion of the Law inheritance, in an amount predetermined by Donation law, known as legitime Tradition Primary compulsory heirs- those who have Contract precedence over and exclude other Prescription compulsory heirs (legitimate children and Succession descendants) Secondary compulsory heirs- those who Succession- defined as a mode of acquisition by succeed only in the absence of the primary virtue of which the property, rights, and obligations compulsory heirs (legitimate parents and to the extent of the value of the inheritance, of a ascendants) person are transmitted through his death to another Concurring compulsory heirs- those who or others either by will or by operation of law succeed together with the primary or Elements of Succession secondary compulsory heirs (illegitimate children and descendants and surviving 1. Decedent- person who died and whose spouse) property is transmitted through succession, 2. Voluntary heirs- those instituted by the whether or not he left a will testator in his will to succeed to the Testator- decedent who made the last will inheritance of the portion thereof of which and testament the testator can freely dispose Executor- person designated in the last will 3. Legal or intestate heirs- those who succeed to and testament to carry out the provisions of the estate of the decedent by operation of law the decedent’s will (decedent died without a valid will or his Executrix- a female executor estate was not entirely disposed of by will) Administrator- person entrusted and assigned by court for the care, custody and Disinheritance- a testamentary disposition by which management of the estate of a decedent a compulsory heir is deprived of, or excluded from Administratrix- a female administrator the inheritance to which he has a right 2. Estate- properties or property rights of the Kinds of Succession decedent, which is the subject matter of succession 1. Testamentary or testate succession- results Inheritance- includes all property, rights and from the designation of an heir, made in a will obligations of a person which are not executed in the form prescribed by law extinguished by his death and includes those 2. Legal or intestate succession- effected by which have accrued thereto since the opening operations of law since the decedent did not of the succession execute a will or if the last will and testament Testate Estate- an estate of a deceased person executed by him is void which is settled or to be settled with a valid 3. Mixed succession- effected partly by will and last will and testament partly by operation of law Intestate Estate- an estate of a deceased person without a will Free portion-part of the whole estate which the 3. Successor- heir or the person to whom the testator could dispose of freely though a written will property or property rights is to be irrespective of his relationship to the recipient transferred Will- an act whereby a person is permitted, with the Devisee- one who is given real property in a formalities prescribed by law, to control to a certain will degree the disposition of his estate to take effect after Legatee- one who is given personal property his death through a will Kinds of Wills 1. Notarial/Ordinary/Attested Will- one which is executed in accordance with the formalities prescribed by Art. 804 to 808 of the New Civil Code 2. Holographic Will- written will which must be entirely written, dated, and signed by the hand of the testator himself Codicil- a supplement or addition to a will, made after the execution of a will and annexed to be taken as a part thereof, by which any disposition made in the original will is explained, added to or altered Special proceedings- a remedy by which a party seeks to establish a status, a right, or a particular fact Probate- a special proceeding to establish the validity of a will Reprobate- a special proceeding to establish the validity of a will previously proved in a foreign country Escheat- a proceeding whereby the State, by virtue of its sovereignty, steps in and claims the real or personal property of a person who dies intestate without heir Consanguinity- relation of persons descending from the same stock or common ancestors Lineal consanguinity- may be descending or ascending, is that which subsists between persons of whom one is descended in a direct line from the other Collateral consanguinity- is that which subsists between persons who have the same ancestors, but who not descend or ascend from one another Property regime- set of rules agreed upon by the parties, before getting married, which would govern their property relations during the course of their married life Recoverable transfer- a transfer of property with retention or reservation of rights over the property by the donor while he still lives Deductions from gross estate- items which the law on estate tax allows to be subtracted from the value of the gross estate in order to arrive at the net taxable estate