Scribd
Upload
5 views4 pages

ModuleTwo - Chapter 4

Co-ownership occurs when multiple heirs inherit or are gifted undivided property, generally exempt from income tax unless certain conditions apply, such as joint management or lack of division for over ten years. Estates and trusts are taxed similarly to individuals, with additional deductions for income distributed to beneficiaries, though these deductions are taxable to the beneficiaries. Foreign trusts do not qualify for these deductions, and distributed income is not deductible.

Uploaded by

mariacolance145
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
5 views4 pages

ModuleTwo - Chapter 4

Co-ownership occurs when multiple heirs inherit or are gifted undivided property, generally exempt from income tax unless certain conditions apply, such as joint management or lack of division for over ten years. Estates and trusts are taxed similarly to individuals, with additional deductions for income distributed to beneficiaries, though these deductions are taxable to the beneficiaries. Foreign trusts do not qualify for these deductions, and distributed income is not deductible.

Uploaded by

mariacolance145
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

CO-OWNERSHIP, ESTATES and TRUSTS

I. CO-OWNERSHIP
Co-ownership occurs when two or more heirs inherit an undivided property from a
decedent, or a donor makes a gift of an undivided property in favor of two or more donees.

GENERAL RULE: A co-ownership is exempt from income tax. The income of the co-
ownership will be taxable (basic tax) to the co-owners in their respective capacities.

EXCEPTION: The following are the instances when the co-ownership may become an
unregistered general co-partnership and therefore becomes a taxable corporation:
1) Co-owners appoint an administrator who manages the affairs of the co-ownership
by making investments therein from which profits are realized. This applies even if
there is already a partition ordered by the court should the joint management be
given to one of the co-owners.
2) The co-owners used the common properties and/or income derived therefrom as a
common fund with intends to make profits.
3) When the property remained undivided for more than ten (10) years and no
attempt was ever made to divide the same among the co-heirs, nor was the
property under administration proceedings nor held in trust.
4) In all other instances when the co-ownership activities are already beyond mere
preservation of the co-owned property.

II. ESTATES AND TRUSTS


The taxable income of the estate or trust shall be computed in the same manner on the
same basis as in the case of individuals.

However, the following additional deductions shall be allowed:


1) The amount of the income of the estate or trust for the taxable year which is to be
distributed currently by the fiduciary to the beneficiaries; and
2) The amount of the income collected by a guardian of an infant who is to be held or
distributed as the court may direct.
3) Basic exemption of P20,000 (Prior to effectivity of TRAIN Law only)

NOTE:
1) The above additional deductions allowed shall be taxable (basic tax) to the
beneficiaries.
2) In case of a trust administered in a foreign country:
a. The above mentioned additional deductions is not allowed;
b. The income distributed to beneficiaries is not deductible.

0
Income Taxation
Module Two: Week 2
Experience Total Human Formation

E-mail address: [Link]@[Link]


1
Landline:(088) 521 0342 local # Mobile: [College mobile no.]
LSU hotlines: 088 521 0342 local 156 or 157
Income Taxation
Module Two: Week 2
Experience Total Human Formation

E-mail address: [Link]@[Link]


2
Landline:(088) 521 0342 local # Mobile: [College mobile no.]
LSU hotlines: 088 521 0342 local 156 or 157
Income Taxation
Module Two: Week 2
Experience Total Human Formation

E-mail address: [Link]@[Link]


3
Landline:(088) 521 0342 local # Mobile: [College mobile no.]
LSU hotlines: 088 521 0342 local 156 or 157

You might also like