The document discusses various transactions that are exempted from the gross estate for estate tax purposes. These include: 1) Merger of usufruct and naked title ownership between family members. 2) Transmission from a fiduciary heir to a fideicommissary heir. 3) Second transfers as desired by the predecessor. 4) Donations to accredited social welfare, cultural, and charitable institutions. 5) The reciprocity clause for property owned in other countries with reciprocal estate tax laws. 6) Capital or paraphernal property owned exclusively by the surviving spouse.

1. Taxation 2 │
GROSS ESTATE
Exemptions from Gross Estate
FLABERT VILLASENCIO, CPA
Notre Dame of Dadiangas University

2. Learning Objectives
▪Identify Transactions Exempted from
Estate Tax
▪Determine the value of gross estate of
with Transactions Excluded from
Estate Tax.

3. EXEMPTIONS TO GROSS ESTATE
1. Merger of usufruct in the owner of
the naked title.
Father Son A
(usufruct)
Son B
(Owner)

4. 2. Transmission from fiduciary heir to
the fideicommissary
Father Daughter A
(first heir)
Son B
(2nd
heir)
EXEMPTIONS TO GROSS ESTATE

5. 3. Second transfer as desired by the
predecessor
Bill
Gates
Pedro Juan
When he get married
EXEMPTIONS TO GROSS ESTATE

6. 4. Donations to social welfare,
cultural & charitable
• Provided that not more than 30% of gift was
used for administration purposes.
• Institution only that are duly accredited by
Philippine council for NGO Certificate.
EXEMPTIONS TO GROSS ESTATE

7. 5. Reciprocity clause
House & Lot in
USA
P5,000,000
Car in
Philippines
P1,000,000
Franchise in
Philippines
P1,000,000
Assuming that Justin Timberlake See Boo, an American and
resident of General Santos City, died with the following
properties, how much is her gross estate assuming that there
is reciprocity in the country?
EXEMPTIONS TO GROSS ESTATE

8. 6. Capital of Surviving spouse
• Property owned exclusively by the surviving
spouse shall not form part of the gross estate
of the decedent.
• Exclusive property of husband is called capital,
while of wife is paraphernal.
EXEMPTIONS TO GROSS ESTATE