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Business and Transfer Taxation Chapter 13A Discussion Questions Answer

1. Gross estate includes all property owned by the decedent at death, wherever located. It is calculated by inventorying all property, subtracting exempt transfers and property not owned, then adding any taxable transfers. 2. Exempt transfers not included in gross estate are property not owned by decedent such as life insurance not payable to estate, property held in trust, or property of surviving spouse. Transfers excluded by law include certain government benefits and charitable donations up to 30% of estate. 3. Taxable transfers added to gross estate include transfers in contemplation of death, revocable transfers, and property passing under a general power of appointment.

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1K views2 pages

Business and Transfer Taxation Chapter 13A Discussion Questions Answer

1. Gross estate includes all property owned by the decedent at death, wherever located. It is calculated by inventorying all property, subtracting exempt transfers and property not owned, then adding any taxable transfers. 2. Exempt transfers not included in gross estate are property not owned by decedent such as life insurance not payable to estate, property held in trust, or property of surviving spouse. Transfers excluded by law include certain government benefits and charitable donations up to 30% of estate. 3. Taxable transfers added to gross estate include transfers in contemplation of death, revocable transfers, and property passing under a general power of appointment.

Uploaded by

Karla Faye Lagang
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Discussion Questions Chapter 13-A

1. What is gross estate? Distinguish the extent of gross estate of each type of decedent taxpayer.
These are all properties of the decedent, tangible or intangible, real or personal, wherever
situated at the point of death.
2. Discuss and illustrate the computational procedures of gross estate.
The Gross Estate Formula
Inventory of properties at the point of death xxx
Less: Exempt transfers
Properties not owned xxx
Properties owned but excluded by law xxx xxx
Inventory of taxable present properties xxx
Add: Taxable transfer xxx
GROSS ESTATE
First, the inventory of the properties of the decedent and their fair values at the point of death shall be
established. If the list of properties of the decedent is known, the list is simply drawn directly, if not, the
inventory must be worked back to establish the list of properties present at the point of death. After
establishing the inventory of properties at the point of death, determined the exempt transfers. These
exempt transfers are the properties not owned by the decedent and the properties owned by the
decedent but are excluded by law. After deducting exempt transfers from the inventory of properties at
the point of death, we now have the inventory of taxable present properties. Any taxable transfers must
be added to the inventory of taxable present properties to get the gross estate.
3. Enumerate the list of property transfers which are not owned by the decedent.
1. Merger of the usufruct in the owner of the naked title.
2. The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the
fideicommissary
3. The transmission from the first heir, legatee, or done in favor of another beneficiary, in
accordance with the desire of the predecessor
4. Proceeds of irrevocable life insurance policy payable to beneficiary other than the estate,
executor or administrator.
5. Properties held in trust by the decedent
6. Separate properties of the surviving spouse of the decedent
7. Transfer by way of bona fide sales
4. Enumerate the list of property transfers which are properly includible in gross estate, but which are
excluded by law.
1. Proceeds of group insurance taken out by a company for its employees
2. Proceed of GSIS policy or benefits from GSIS
3. Accruals from SSS
4. United States Veterans Administration (USVA) benefits – RA 136
5. War damage payments
6. All bequests, devises, legacies or transfers to social welfare, cultural and charitable
institutions, no part of net income of which inures to the benefit of any individual; provided however,
that not more than 30% of the said bequest, devises, legacies or transfers shall be used by such
institutions for administration purposes.
7. Acquisitions and/ or transfers expressly declared as non-taxable by aw
8. Bank deposits withdrawn from the decedent account during the settlement of the estate.
5. Enumerate the list of taxable transfers.
1. Transfer in contemplation of death
2. Revocable transfers, including conditional transfers
3. Property passing under general power od appointment
6. Discuss the treatment of mortis causa transfer made for insufficient consideration.
Taxable transfers made for insufficient consideration are valued as fair value at the date of
death less consideration paid at the date of transfer. If the consideration is adequate it is considered as
a bona fide sale not subject to estate tax.
7. Discuss the valuation rules of real property, stocks, usufruct and annuity and other properties.
Valuation Rules
1. The fair value of the property as of the time of death shall be value to include in gross estate
2. Fair value rules set by law or revenue regulations must be followed.
3. In default of such fair value rules, reference may be made to fair value rules under generally
accepted accounting principles.
4. Encumbrances on the property or decrease in value thereof after death shall be ignored.

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