Estate Taxes

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Business and Transfer Taxes Notes
Estate Tax Basic Terms in Taxation
Taxation – power of the Government to impose burden upon
the people to earn Revenue.

Right –

The basics of human existence.Those things that are Necessary to live. You cannot live without these. Eg. Right to breathe, right to live, right to vote, Freedom of speech. Etc.

3 Inherent Powers of the State ( definition: Acaylar, PJ) 1. Police Power – power to monitor people for the general welfare. 2. Eminent Domain – power to expropriate private property for public use. 3. Taxation – power of the government to impose burden upon the people to earn revenue.

PRivilege–

Are Rights that you can live without. These are things that are allowed and granted by the state. These privileges can be Taxed.

Eg. Driver’s license, Professional Licenses, etc. You can live without having to drive or be a lawyer, etc.

U Note:
Government requires us to pay taxes so that we can exercise the privileges that they have granted upon us and these taxes also work for the protection of our rights and privileges. To understand taxation, one must understand the concept of rights and privileges. Rights are usually not taxable while Privileges are usually taxable. Double Taxation - illegal in the Philippines. You cannot tax the same thing twice for the same period and for the same purpose. Capital Gains tax – A capital gains tax (abbreviated: CGT) is a tax charged on capital gains, the profit realized on the sale of a noninventory asset that was purchased at a lower price. 2 Basic Questions in Taxation 1. Are you a Citizen? 2. Are you a Resident If the answer is YES to anyone of these this is TAXABLE.

U Note:

Taxation is the foundation wherein government is founded on. Taxes and the government have a symbiotic relationship. “Without taxation there is no government” - Judge Cooley KINDS OF TAXES 1.

Income Taxes – taxes levied on the financial
income of persons, corporations, or other legal entities. Business Taxes- taxes levied on the privilege to enter into business

2.

a. Value Added Taxes
b. Other Percentage Taxes c. Excise Tax – tax imposed on SIN products ( products that are harmful and wasteful) 3.

Transfer Taxes – taxes on the privilege to
transfer of property from one person to another.

a. Estate Taxes – takes effect after death b. Donor’s Taxes – takes effect during lifetime a. Donation Inter Vivos - during life b. Donation Mortis Causa – takes effect after death. ( Last will and Testament) 4.

Documentary Taxes – taxes levied on the
privilege to enter into contract.

RIGHT

VS.

PRIVILEGE

Notes from: The New Philippine Business and Transfer Taxes (Principles, Law and Problems) by Virgilio D. Reyes (Nov 2007) Business and Transfer Taxes Notes from G. Mendoza And Lectures by: ATTY. PRACKIE JAY ACAYLAR, CPA (EAC- Manila)

1 Marikitp

Maia Castaneda 2008

Business and Transfer Taxes Notes
Estate Tax
W W W Legitimate Children &Legitimate Descendants Legitimate Surviving Spouse Legitimated Children

Principles of Succession
EleMENTS OF SUCCESSION

1. Deceased/ Decedent –Person who died.
Testator/ Testatrix (F) – person who wrote the last will and testament. Also called the decedent. 2. Estate- a bulk of property left behind by the decedent. 3. Successors/ Heir- the persons to whom the estate is given to. 4. Executor/Administrator – person who will take charge of the estate before the distribution. ** Executor- person named in the will by the testator ** Administrator- person appointed by the courts in the absence of an assigned executor.

Legitimate Children- all children born & conceived NOT out of wedlock. ♪ Legitimate Child ♪ Legally Adopted Child ♪ Legitimated Child Illegitimate Children – all children born & conceived out of wedlock.

“All Children conceived and born outside a valid marriage are considered illegitimate.” ~(Art 165, Family Code of the Philippines)

~ Secondary Compulsory Heir – only can...
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