Estate And Donors Tax.docx

ESTATE and DONORS TAX 1) LORENZO POSADAS A transmission by inheritance is taxable at the time of the predecessor's death, notwithstanding the postponement of the actual possession or enjoyment of the estate by the beneficiary, and the tax measured bay the value of the property transmitted at that time regardless of its appreciation or depreciation. The tax therefore is upon transmission or the transfer or devolution of property of a decedent, made effective by his death. The compensation of a trustee, earned, not in the administration of the estate, but in the management thereof for the benefit of the legatees or devisees, does not come properly within the class or reason for exempting administration expenses. That inheritance taxation is governed by the statute in force at the time of the death of the decedent. One liner: the phrase "judicial expenses of the testamentary or intestate proceedings" does not include the compensation paid to a trustee of the decedent's estate when it appeared that such trustee was appointed for the purpose of managing the decedent's real estate for the benefit of the testamentary heir. 2) SISON vs TEODORO Expenses or premiums paid or incurred by an executor or administrator serving without compensation to procure a bond is not a proper charge against the estate. The giving of a bond is in the nature of a qualification for the office, and not necessary in the settlement of the estate. The position of an executor or administrator is one of trust. It is proper for the law to safeguard the estates of deceased persons by requiring the executor or administrator to give a suitable bond. One liner: The premiums paid on the bond filed by the administrator cannot be included as an expense of administration since the giving of a bond is in the nature of a qualification for the office, and not necessary in the settlement of the estate. 3) CIR vs CA 123206 Administration expenses, as an allowable deduction from the gross estate of the decedent for purposes of arriving at the value of the net estate, have been construed to include all EXPENSES "essential to the collection of the assets, payment of debts or the distribution of the property to the persons entitled to it." In other words, the expenses must be essential to the PROPER SETTLEMENT of the estate. Expenditures incurred for the INDIVIDUAL benefit of the heirs, devisees or

legatees are not deductible. Coming to the case at bar, the notarial fee paid for the extrajudicial settlement is clearly a deductible expense since such settlement effected a distribution of Pedro Pajonar's estate to his lawful heirs. Similarly, the attorney's fees paid to PNB for acting as the guardian of Pedro Pajonar's property during his lifetime should also be considered as a deductible administration expense. PNB provided a detailed accounting of decedent's property and gave advice as to the proper settlement of the latter's estate, acts which contributed towards the collection of decedent's assets and the subsequent settlement of the estate. 4) DIZON vs CIR The appropriate deduction is the "value" that the claim had at the date of the decedent's death. Also, as held in Propstra v. U.S., where a lien claimed against the estate was certain and enforceable on the date of the decedent's death, the fact that the claimant subsequently settled for LESSER amount did NOT preclude the estate from deducting the ENTIRE amount of the claim for estate tax purposes. That postdeath developments are not material in determining the amount of the deduction. We express our agreement with the date-of-death valuation rule 1. First. There is no law which disregards the date-of-death valuation principle and particularly provides that post-death developments must be considered in determining the net value of the estate. It bears emphasis that tax burdens are not to be imposed, nor presumed to be imposed, beyond what the statute expressly and clearly imports, tax statutes being construed strictissimi juris against the government. Any doubt on whether a person, article or activity is taxable is generally resolved against taxation. 2. Second.Such construction finds relevance and consistency in our Rules on Special Proceedings wherein the term "claims" required to be presented against a decedent's estate is generally construed to mean debts or demands of a pecuniary nature which could have been enforced against the deceased in his lifetime, or liability contracted by the deceased before his death. One liner: The claims existing at the time of death are significant to, and should be made the basis of, the determination of allowable deductions. 5. ABELLO vs CIR Donation has the following elements: (a) the reduction of the patrimony of the donor; (b) the increase in the patrimony of the donee; and, (c) the intent to do an act of liberality or animus donandi.

that donative intent is not negated by the presence of other intentions, motives or purposes which do not contradict donative intent. In fine, the purpose for which the sums of money were given, which was to fund the campaign of Senator Angara in his bid for a senatorial seat, cannot be considered as a material consideration so as to negate a donation. That political/electoral contributions, duly reported to the Commission on Elections, are not subject to the payment of any gift tax. This all the more shows that the political contributions herein made are subject to the payment of gift taxes, since the same were made prior to the exempting legislation, and Republic Act No. 7166 (November 25, 1991) provides no retroactive effect on this point. One liner: Political/electoral contributions duly reported to the Commission on Elections are not subject to the payment of any gift/donor tax.