Problem:

X, married to Y on August 8, 1988, died on July 1, 2014 with the following properties:
a) Land donated to him by his father before his marriage to Y, valued at P2,000,000
b) Residential building acquired before marriage through his own labor, valued at P1,000,000 w
c) Car donated to him by his father during marriage, valued at P1,600,000
d) Apartment builidng acquired during marriage through his own labor, valued at P3,000,000
e) Commercial building which he inherited from his grandfather, who died on June 1, 2013, val
The following are some of the deductions from the estate:
a) Funeral expenses of P800,000
b) Medical expenses of P2,000,0000
Computation:
Gross Estate:
Land
Residential building
Car
Apartment building
Commercial building
Less: Deductions
Funeral Expenses
Medical expenses
Judicial expenses
Claims against the estate
Claims against insolvent persons
Unpaid mortgages
Unpaid taxes
Casualty losses
Transfers for public use
Vanishing deduction
Standard deduction
Family Home
Share of the surviving spouse
Net Taxable Estate
Multiply by tax rate
Estate tax due
Tax credit
Estate tax payable

2,000,000.00
1,000,000.00
1,600,000.00
3,000,000.00
10,000,000.00

17,600,000.00

200,000.00
500,000.00

6,145,454.55
1,000,000.00
1,000,000.00
1,500,000.00

10,345,454.55
7,254,545.45

Vanishing Deduction:
Value of the Property (lesser amount between value at the time of prior transfer and value at the time of d
Less: Mortgage on the property paid by the decedent, if any
Initial basis

Less: Proportionate deduction allowed

Expenses, Losses, Indebtedness, Taxes
Transfer for public use
Multiply by (initial basis over gross estate)
Final basis of vanishing deduction
Multiply by percentage of deduction level
Vanishing deduction

P2,000,000
alued at P1,000,000 which was constituted as their family home

alued at P3,000,000
d on June 1, 2013, valued at that time at P8M and currently valued at P10M. Estate taxes thereon had been pa

er and value at the time of death of present decedent)

700,000.00
0
0.454545455

tate taxes thereon had been paid in 2013.

8,000,000.00
0
8,000,000.00

318,181.82
7,681,818.18
80%
6,145,454.55

Illustration 1:

X has an estate in the Philippines worth 1M and in the US worth 3M (assuming the values are net of allowable deductions).
He paid an estate tax in the US amounting to 300K. Is he liable to pay estate tax in the Philippines?

Net estate in the Philippines

Net estate in the US
Estate tax paid in the US
Estate tax in the Philippines
Proportion of Philippine Estate Tax which the estate in US bears to his entire net estate
Actual estate tax paid to foreign country
Tax credit allowed

Illustration 2:
X has an estate in the Philippines worth 1M, in the US worth 3M and in Canada worth 6M (assuming the values are net of
allowable deductions). He paid an estate tax in the US amounting to 300K and in Canada worth 100K. Is he liable to pay
estate tax in the Philippines?

Limit A: Per foreign country = (net estate per foreign country/entire net estate) x Phil. estate tax
Limit B: By total = (net estate all foreign countries/entire net estate) x Phil. Estate tax
Limit A:
US tax credit = min ( 3/10 x 355,000 or 300,000)
Canada tax credit = min (6/10 x 355,000 or 100,000)
Total
Limit B: min (3+6/10 x 355,000 or (300,000+100,000))

Tax credit (lower between actual estate tax paid to foreign countries and (lower amount b

1,000,000.00
3,000,000.00
300,000.00
355,000.00
266,250.00
300,000.00
266,250.00

106,500.00
100,000.00
206,500.00
319,000.00
206,500.00