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CHAPTER 1

TRANSFER AND BUSINESS TAXATION

PROPERTY embraces everything which is or may be the


subject of ownership. It includes not only ownership and
possession but also the right of use and enjoyment for
lawful purposes.
OWNER, the person in whom the ownership, dominion or
title of property is vested.
OWNERSHIP is the exclusive right of possessing, enjoying
and disposing of a property.

TRANSFER OF PROPERTY

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1. OCCUPATION. The property seized is without a known owner.


2. INTELLECTUAL CREATION. The composer owns his musical
compositions while the author owns his literary, legal, historical,
scientific or other work.
3. DONATION. An act of liberality whereby a person disposes
gratuitously of a thing or right in favor of another, who accepts it.
4. SUCCESSION. A mode of acquisition by virtue of which the
property, rights and obligations to the extent of the value of the
inheritance, of a person are transmitted through his death to another.
5. PRESCRIPTION. One acquires ownership and other legal rights
through the lapse of time in manner and under the conditions laid down
by law

MODES OF ACQUIRING OWNERSHIP

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CONCEPT AND NATURE

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REVENUE REGULATIONS 2-2003 is a consolidated revenue


regulations on estate tax and donors tax incorporating the
amendments introduced by RA 8424, the Tax Reform Act of
1997, thus amending Revenue Regulations 17-1993.
These regulations shall govern the taxation of the:
1. Transmission of the decedents estate; and
2. Donations made by persons
i. Natural or juridical
ii. Citizens or aliens
iii. Residents or non-residents

RECENT BIR ISSUANCES

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CHAPTER 2
BASIC CONCEPTS OF SUCCESSION

Is a mode of acquisition by virtue of which the property,


rights and obligations to the extent of the value of the
inheritance, of a person are transmitted through his death to
another or others either by his will or by operation of law.
The rights to the succession are transmitted from the
moment of death of the decedent.

SUCCESSION

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1. TESTAMENTARY OR TESTATE. Made in a will


executed in the form prescribed by law.
2. LEGAL OR INTESTATE. Effected by operation of law
since the decedent did not execute a will.
3. MIXED. Partly by will and partly by operation of law

KINDS OF SUCCESSION

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1. Death of the decedent


2. Inheritance
3. Successors
4. Acceptance

ELEMENTS OF SUCCESSION

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EXECUTOR. A person appointed by a testator to


carry out the directions and requests in his will and
to dispose of the property according to the
testamentary provisions after his death.
ADMINISTRATOR. A person appointed by the
court to administer the assets and liabilities of a
decedent. He is usually a relative of the decedent
who has come forward and applied for the position.

EXECUTORS AND ADMINISTRATORS

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WILL. An act whereby a person is permitted, with the


formalities prescribed by law, to control to a certain degree
the disposition of his estate to take effect after his death.

CODICIL. An instrument that amends the provisions of a


will. It must be executed with the same formalities as a will,
but it only required to have a provision or provisions
amending a will.
PROBATE OF A WILL. A court procedure by which a will
is proved to be valid or invalid. It involves collecting a
decedents estate, liquidating liabilities, paying necessary
taxes and distributing property to heirs.

TESTAMENTARY SUCCESSION

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INSTITUTION OF AN HEIR. An act by virtue of which a


testator designates in his will the person or persons who are
to succeed him in his property and transmissible rights and
obligations.

LEGITIME. Part of the testators property which cannot


dispose of because the law has reserved it for certain heirs
who are, therefore, called compulsory heirs.

TESTAMENTARY SUCCESSION

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1. Legitimate children and descendants, with respect to


their legitimate parents and ascendants.
2. In default of the foregoing, legitimate parents and
ascendants, with respect to their legitimate children and
descendants.
3. The widow or widower
4. Acknowledged natural children, and natural children by
legal fiction.
5. Other illegitimate children.

COMPULSORY HEIRS

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