NET TAXABLE STATE AND ESTATE TAX

Mr. Paterno, a citizen and resident of the Philippines, died on Nov.1, 2015. He was married and the property relationship
during the marriage was the absolute community of property. He left the following property, with their fair market
values, and obligations and charges thereon:

Agricultural land P 1,100,000

House and lot acquired by inheritance 4 ½ years ago even before the marriage; with a fair
market value of P420, 000 and a mortgage of P120, 000. Mr. Paterno paid P20, 000 before he
died. It was used as family home.

500, 000

Jewelry of Mrs. Paterno, acquired during the marriage with the exclusive money of Mrs. Paterno. 50, 000

Personal effects acquired during the marriage, with income during the marriage:

For use of Mr. Paterno 60, 000

For use of Mrs. Paterno 70, 000

Cash on hand and in banks, source of income cannot be identified 1, 300,000

Cash in bank:

From sale at a loss of exclusive property 1, 500,000

Received as a gift six year ago and before the marriage (current account) 40, 000

Other property:

Owned before marriage 90, 000

Acquired during the marriage 20, 000

Total funeral expenses of P300, 000. Paid from the estate. 58, 000

Judicial expenses 120, 000

Unpaid mortgage (already on the property at the time acquired):

On agricultural land 20, 000

On house and lot 100, 000

Other obligations 20, 000

Legacy to the Philippine Government from current account 10, 000

Exclusive Community Total

Community Properties
Agricultural Land P1, 100,000 P1, 100,000

House and lot 500,000 500,000

Jewelry 50,000 50,000

Cash (Income) from Unidentified Sources 1, 300, 000 1, 300, 000

Cash received as Gift 40,000 40,000

Property Owned before Marriage 90,000 90,000

Property Acquired during Marriage 20,000 20,000

Exclusive Properties

Cash Sale of Exclusive Property

P1,500,000 P1,500,000
Clothes
60,000
Gross Estate
P1, 560, 000 P3,100,000 P4,660,000

Less: Deductions

Ordinary Deductions

Community Deductions

Funeral Expenses (P 58, 000) (P 58, 000)

Judicial Expenses ( 120,000) ( 120,000)

Unpaid Mortgage-Agricultural Land ( 20,000) ( 20,000)

Unpaid Mortgage-House and Lot ( 100,00) ( 100,00)

Other Obligations ( 20,000) ( 20,000)

Transfer for Public Purposes ( 10,000) ( 10,000)

Vanishing Deductions (Sch) ( 74,369) ( 74,369)

Total Conjugal Deductions (P 402,369) (P 402,369)

Net Conjugal Estate P2,697,631

Special Deductions
 Family Home ( 200,00)

Standard Deduction (1,000,000)

Total Deductions (1,602,369)

Net Estate

Less: ½ Share of Surviving Spouse P 3,057,631

Gross Community Estate P3,100,000

Community Deductions ( 402,369)

Net Community Estate 2,697,631

(2,697,631/2) ( 1,348,816)

Net Taxable Estate P1,708,816

Estate Tax:

On P 5000,000 P 15,000

1,208,815 at 8% 96,705

P1,708,815 P111,705

Schedule of Vanishing Deduction:

P420,000

Value taken, Property inherited 20,000

Less: Mortgage paid P400,000

Initial bases

Less: P400,000 x 328,000*** 28,155

P 4,660.000** ________

Final Basis P371,845

_____20%
Multiply by rate
P74,369
Vanishing deduction
* Family home: P500,000 (fair value) – P100,000 (unpaid mortgage) = P400,000

** Gross estate

*** Funeral expenses, judicial expenses, unpaid mortgage-agricultural land, house & lot, other obligations, transfer
for public purpose

Illustration (pre-TRAIN): Mr. and Mrs. Polo made donations of their conjugal property to the following:

Date of donations Donee Property Donated Fair Market Value

Feb.14 To Berna, daughter and Resthouse in Zambales P 800, 000

Mario, her groom on their
marriage last Jan.25.

April 8 To Phil. National Red Cross Cash 400, 000

(PNRC)

April 13 To the Province of Bulacan Lot for Public playground 2, 000, 000

May 13 To Dina, Mrs. Polo’s sister Apartment one unit 700, 000
as gift for Dina’s birthday.

June 13 To Mayor Reynes who is Cash 300, 000

running for reelection.

Sept. 20 To Lito, Mr. Polo’s brother Cash 430, 000

for topping the medical
board exam.

● On the one-unit apartment donated by Mrs. Polo to her sister, Dina has unpaid mortgage of P300, 000.
● Of the P430, 000 cash given to Mr. Polo’s brother, Lito, Mr. Polo pointed out that P30, 000 must be
donated to St. Paul, The Apostle Parish.

The donor’s tax payable by each spouse for last donation made within the years are computed below:

Mrs. Polo

1. Donor’s tax to be based on the table for donations to non-strangers.

Gross Gift, May 13, To Dina P350, 000

Less: Exemption 150, 000

Net Gift , This Date P200, 000

Add: Prior Net Gift

Gross Gift, Feb. 14, To Berna P200, 000

Less: Exemption 10, 000 190, 000

P390, 000
Donor’s tax, Total Net Gift

On P200, 000 P2, 000

190, 000 x 4% 7, 600

P 390, 000 P9, 600

Less: Tax on Prior Net Gift

On P100, 000 Exempt

90, 000 x 2% P1, 800 1, 800

P190, 000

Donor’s Tax Still Due 7, 800

2. 30% Donor’s tax for donations to strangers

Gross Gift, Sept. 20, To Lito

Less: Exemption P215, 000
Net Gift 15, 000
Add: Prior Net Gift
P200, 000
Gross Gift, Feb. 14, To Mario
Less: Exemption
Net Gift, This Date

Gross Gift, Apr. 8, To PNRC P200, 000

Less: Exemption
Net Gift, This Date 0

P200, 000
Gross Gift, Apr. 13, To Bulacan
Less: Exemption
Net Gift, This Date
P200, 000
Total Net Gift 200, 000
Multiply by:
Donor’s Tax on Total Net Gift
Less: Donor’s Tax on All Prior Net 0
Gift (2/14, P200, 000 x 30%)
Donor’s Tax Due
P1, 000, 000

1, 000, 000

0 200, 000

400, 000

30%

120, 000

60, 000

P 60, 000

Mr. Polo

1. Donor’s tax to be based on the table for donations to non-strangers.

Gross Gift, Sept. 20, To Lito

Less: Exemption P215, 000
Net Gift, This Date 15, 000
Add: Prior Net Gift
Gross Gift, Feb 14, To Berna P200, 000
Less: Exemption
Aggregate Net Gift
P200, 000
Donor’s Tax, Total Net Gift
10, 000 190, 000

On P200, 000 P390, 000

190, 000 x 4%

P 390, 000

Less: Tax on Prior Net Gift P2, 000

7, 600

On P100, 000 Exempt P9, 600

90, 000 x 2% P1, 800

P190, 000
Donor’s Tax Still Due

1, 800

7, 800

2. 30% Donor’s tax for donations to strangers

Gross Gift, May 13, To Dina

Less: Exemption
Net Gift
Add: Prior Net Gift

Gross Gift, Feb. 14, To Mario

Less: Exemption
Net Gift, This Date
P200, 000
Gross Gift, Apr. 8, To PNRC
Less: Exemption 0
Net Gift, This Date
P200,000
Gross Gift, Apr. 13, To Bulacan
Less: Exemption
Net Gift, This Date P200, 000

Total Net Gift 200, 000

Multiply by: 0
Donor’s Tax on Total Net Gift
Less: Donor’s Tax on All Prior Net
Gift (2/14, P200, 000 x 30%)
Donor’s Tax Due P1, 000, 000

1, 000, 000

0 200, 000

400, 000

30%

120, 000

60, 000

P 60, 000