THE LAW ON TRANSFER AND BUSINESS TAXATION
2022 04-TX-00023-0 978-621-04-2877-3 BS Accountancy B. GROSS ESTATE 1. In general.............................................................................. 17 2. Concept of “residence” for estate tax purposes ................... 18 3. Situs of intangible personal property.................................. 18 4. Kinds of property embraced................................................. 19 5. Interest in property .............................................................. 19 6. Specific items includible in gross estate.............................. 20 7. Proceeds of life insurance..................................................... 20 8. Conjugal or separate character of life insurance proceeds ......................................................... 22 9. Incidence or burden of estate tax ........................................ 14 10. Power to impose estate tax .................................................. 15 11. Death, the generating source of power................................ 15 12. Accrual of, and obligation to pay, the tax distinguished .................................................................. 16 13. Law at time of death applicable .......................................... 16 9. Necessity for “transfer” or “passing” of property ................ 23 10. Inter vivos transfers subject to the tax ................................ 23 11. Reasons for taxability of the transfers ................................ 24 12. Distinctions between donation inter vivos and donation mortis causa ............................................ 24 13. Transfer in contemplation of death ..................................... 25 14. Property covered by the transfer ......................................... 26 15. Circumstances considered.................................................... 27 16. Motives associated with life................................................. 27 17. Transfer with retention or reservation of certain rights .............................................................. 28 18. Property covered by the transfer ......................................... 28 19. Manner of postponing possession of property transferred ..................................................................... 30 vi C. EXCLUSIONS AND EXEMPTIONS 1. Exclusions ............................................................................. 36 2. Exclusive property of each spouse....................................... 36 3. Exemptions ........................................................................... 38 4. Reciprocal exemption as to intangible personal property ........................................................... 40 5. Exemptions under special laws ........................................... 41 D. DEDUCTIONS 1. Classes of deductions ........................................................... 42 2. Claims against the decedent’s estate .................................. 43 3. Substantiation of money claims .......................................... 44 4. Claims against insolvent persons........................................ 47 5. Unpaid mortgage indebtedness ........................................... 48 6. Unpaid taxes......................................................................... 49 7. Casualty losses ..................................................................... 50 8. Transfers for public use ....................................................... 50 9. The family home ................................................................... 51 10. Manner of charging deductions from gross estate.............. 53 11. Vanishing deduction (of property previously taxed) explained ............................................................. 57 20. Revocable transfers .............................................................. 31 21. Life insurance proceeds........................................................ 32 22. When power to alter, etc., considered to exist .................... 32 23. Transfer of property under general power of appointment ............................................................... 33 24. Requisites for taxability of the property ............................. 33 25. Source of the appointed property ........................................ 34 26. General power distinguished from special power............... 34 27. Function and purpose of powers of appointment................ 34 28. Transfer for insufficient consideration................................ 35 12. Reason and justification for vanishing deductions............. 58 13. Requisites for vanishing deduction ..................................... 59 14. Limitations upon the amount of deduction allowable ......................................................................... 59 15. Net share in the conjugal (or community) property of surviving spouse ......................................... 66 16. Other deductions .................................................................. 67 17. Deductions allowed to nonresident estates......................... 67 E. VALUATION 1. In general.............................................................................. 69 2. Basis of valuation ................................................................. 69 3. Valuation of real property.................................................... 69 4. Valuation of personal property ............................................ 70 5. Valuation of usufruct ........................................................... 74 6. Valuation of naked title ....................................................... 74 7. Valuation of annuities.......................................................... 75 8. Valuation of legacy of education.......................................... 76 9. Valuation of property transferred inter vivos ..................... 76
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CONTENTS
CONTENTS
Preface ........................................................................................ iii
INTRODUCTION 1. Definition of taxation ........................................................... 1 2. Purpose of taxation............................................................... 1 3. Definition of taxes ................................................................ 2 4. Essential characteristics of taxes ........................................ 2 5. Underlying theory and basis of taxation............................. 3 6. Nature of taxation ................................................................ 3 7. Scope or aspects of taxation ................................................. 4 8. Basic principles of a sound tax system................................ 4 9. Classification of taxes........................................................... 5 10. Remedies available to the government to collect tax ................................................................... 7 11. Remedies available to the taxpayer in connection with the collection of tax ............................. 8 12. Construction of provisions of our Tax Code ........................ 9 Part I
TRANSFER TAXATION Chapter 1. — ESTATE TAX A. PRELIMINARY TOPICS
v 9. Incidence or burden of estate tax ........................................ 14 10. Power to impose estate tax .................................................. 15 11. Death, the generating source of power................................ 15 12. Accrual of, and obligation to pay, the tax distinguished .................................................................. 16 13. Law at time of death applicable .......................................... 16 B. GROSS ESTATE 1. In general.............................................................................. 17 2. Concept of “residence” for estate tax purposes ................... 18 3. Situs of intangible personal property.................................. 18 4. Kinds of property embraced................................................. 19 5. Interest in property .............................................................. 19 6. Specific items includible in gross estate.............................. 20 7. Proceeds of life insurance..................................................... 20 8. Conjugal or separate character of life insurance proceeds ......................................................... 22 1. Concept and nature of transfer taxes.................................. 10 2. Kinds of transfer taxes......................................................... 10 3. History of death taxes .......................................................... 11 4. Definition of estate tax......................................................... 12 5. Definition of inheritance tax................................................ 12 6. Reasons for repeal of inheritance tax.................................. 12 7. Nature and object of estate tax............................................ 13 8. Purpose and justification of estate tax ................................ 13 9. Necessity for “transfer” or “passing” of property ................ 23 10. Inter vivos transfers subject to the tax ................................ 23 11. Reasons for taxability of the transfers ................................ 24 12. Distinctions between donation inter vivos and donation mortis causa ............................................ 24 13. Transfer in contemplation of death ..................................... 25 14. Property covered by the transfer ......................................... 26 15. Circumstances considered.................................................... 27 16. Motives associated with life................................................. 27 17. Transfer with retention or reservation of certain rights .............................................................. 28 18. Property covered by the transfer ......................................... 28 19. Manner of postponing possession of property transferred ..................................................................... 30 20. Revocable transfers .............................................................. 31
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