8/13/2019 Annex 101 - KK Estate FINAL

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MEMORY AID IN TAXATION LAWSAN BEDA COLLEGE OF LAW – 2003 CENTRALIZED BAR OPERATIONS

Reproduction in any form of this copy is strictly prohibited!!!

KK – 1 TAXATION LAW COMMITTEE: Chairperson: Rhodaline Regoso; Asst . Chairperson & EDP: Maricel Alisuag; Su bject Heads:Junelet Mataro, Michelle Alvarez, Efren Dizon, Khan Guieb; Members: Alexis Cervantes.Leizl Calimaran, Berna Quibal, Noreli De Claro, Jocelyn Gamboa, Albert Rodriguez, Karla Cabel, Joey Caraig, Rodolfo Quitolbo, Liam Pagdanganan, Paul Lawrence Lim, Alder Delloro, John Ivan Tablizo, Ria Ibaviosa, PanchoVas uez, Aileen Roxas, Leif O iña

ANNEX KK: ESTATE AND HEIRS AS INCOME TAXPAYERSThe taxable year is 2002 .Distributions were made in 2002.

THE ESTATE

ESTATE’S INCOME TAX HEIR’S INCOME TAX Gross Income P 500,000 Gross IncomeLess: Deductions Own gross income P 150,000

For expenses P 100,000 Income received from the estate 75,000For income distribution 75,000 175,000 Total P 225,000

Net Income P 325,000 Less: Own deductions 80,000Less: Exemption 20,000 Net Income P 145,000Taxable income P 305,000 Less: Personal exemption 32,000

Income Tax (Sec 24A) P 66,500 Taxable income P 113,000Income tax P 17,100

Taxpayerin 2002?

Distribution in 2002 out of the corpus none (not income, thus, no income tax may be imposed) of the estate

Distribution in 2002 out of the income none (already subjected to income tax in taxable year 2001) of 2001

IF:(a) DISTRIBUTION is made in 2002 out of heir

the income of 2002

(b) RETENTION is made by the estate estate of the income of 2002

I l lustrat ion: Mr. X died leaving a net estate of P5,000,000. The estate

is in the hands of the executor. Mr. Y, married, is one of theheirs to the estate. The estate had a gross income of P500,000and expenses of P100,000 on the properties in the estate.

Mr. Y’s own income and expenses of P150,000 andP80,000, respectively.

The executor distributed to Mr. Y the following:From the properties (called the corpus) P 125,000From the current year’s income 75,000

8/13/2019 Annex 101 - KK Estate FINAL

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