Collector of Internal Revenue vs. Fisher
may be aowed as deductions from the gross estate of decedent in order to arrive at the vaue of the net estate.
GR. No. L-11622 January 28, 161 Held: 2es. Reciprocity must be total. If any of the two states collects or imposes or does !"C#RIN$% “ Reciprocity not exempt any transfer, death, legacy or succession tax of any character, the reciprocity does not work.”
F&C#'% Walter G. Stevenson was born in the Philippines of Brish parents, married in Manila to another Brish subject, Beatrice. He died in !" in #alifornia where he and his wife moved to. $n his will, he instuted Beatrice as his sole heiress to certain real and personal properes, amon% which are &',''' shares of stoc(s in Mindanao Mother )ode Mines *Mines+. $an Murra Sta- *Sta-+, the appointed ancillar administrator of his estate led an estate and inheritance ta/ return. He made a preliminar return to secure the waiver of the #$0 on the inheritance of the Mines shares of stoc(. $n !"&, Beatrice assi%ned all her ri%hts and interests in the estate to the spouses 1isher. StaSta- led led an amende amended d estate estate and inheri inherita tance nce ta/ return return claimi claimin% n% 233$4$5 233$4$526) 26) 787MP4$56S, one of which is the estate and inheritance ta/ on the Mines9 shares of stoc( pursuant pursuant to a reciprocit reciprocit proviso in the 6$0#, hence, warrann% warrann% a refund refund from what he iniall paid. 4he collector denied the claim. He then led in the #1$ of Manila for the said amount. #1$ ruled that *a+ the : share of Beatrice should be deducted from the net estate of Walter, *b+ the intan%ible personal propert belon%in% to the estate of Walter is e/empt from inheritance ta/ pursuant to the reciprocit proviso in 6$0#.
I''($)'% Whether or not the estate can avail itself of the reciprocit proviso in the 6$0# %rann% e/empon from the pament of ta/es for the Mines sh ares of stoc(. R(LING% N". 0eciprocit must be total. $f an of the two states collects or imposes or does not e/empt an transfer, death, le%ac or succession ta/ of an character, the reciprocit does not wor(. In the Philippine Philippines, s, upon upon the death of any cizen cizen or residen resident, t, or non-resi non-residen dentt with properes, there there are imposed imposed upon his estate, estate, both an estate and and an inheritance inheritance tax. tax.
*ut, un+er the las of California, only inheritance ta is i/ose+. 2lso, althou%h the 1ederal $nternal 0evenue #ode imposes an estate ta/, it does not %rant e/empon on the basis of reciprocit. 4hus, a 1ilipino ci;en shall alwas be at a disadvanta%e. 4his is not what the le%islators intended. SP7#$1$#2))<= Secon&& of the 6$0# provides that >6o ta/ shall be collected under this 4itle in respect of intan%ible personal propert *a+ if the decedent at the me of his death was a resident of a forei%n countr which at the me of his death did not impose a transfer of tax or death tax of any character in respect of intangible personal property of cizens of the Philippines not residing in that foreign country, or *b+ if the laws of the forei%n countr of which the decedent was a resident at the me of his death allow a similar e/empon from transfer ta/es or death ta/es of ever character in respect of intan%ible personal propert owned b ci;ens of the Philippines not residin% in that forei%n countr.? 5n the other hand, Secon @A" of the #alifornia $nheritance 4a/ )aw provides that intan%ible personal propert is e/empt from ta/ if the decedent at the me of his death was a resident of a territor or another State of the nited States or of a forei%n state or countr which then imposed a le%ac, succession, or death ta/ in respect to intan%ible personal propert of its own residents, but either=. 3id not impose a le%ac, succession, or death ta/ of an character in respect to intan%ible personal propert of residents of this State, or Had in its laws a reciprocal provision under which intan%ible personal propert of a nonC resident was e/empt from le%ac, succession, or death ta/es of ever character if the 4erritor erritor or other State of the nited States or forei%n state or countr in which the nonresident resided allowed a similar e/empon in respect to intan%ible personal propert of residents of the 4erritor or State of the nited States or forei%n state or countr of residence of the decedent.?
Cir v ca and pajonar Facts: Private Facts: Private respondent Josefina Pajonar was the guardian of the person of decedent Pedro Pajonar. Pajonar. The The property of the decedent was put by the RTC- Dumaguete, Dumaguete, under the guardianship of the Phiippine !ationa "an# via specia proceeding, wherein $%, %%% was spent therein for payment of attorney&s fees. 'hen the decedent died, instead of fiing a estate ta( return, P!" advised Josefina to e(tra judiciay sette the estate of his brother. The decedent&s estate was e(tra-judiciay sett ed and the heirs paid an amount of )%, *$+ for the notariation of the deed of e(tra-judicia settement of estate. The private paid the estate ta(, however, however, they were subseuenty subseuenty assessed assessed of deficiency ta(es because the amount paid in the specia proceeding $%, %%%/ and the notariation fee )%, *$+/ cannot be caimed as a deduction to the decedent&s estate. Private respondent paid the said ta(es under protest. 'hie the case is under review by the "0R, she fied a caim for refund in the C T1 which was granted. Issue: whether Issue: whether or not the notaria fee paid for the e(trajudicia settement in the amount of P)%,*$+ and the attorney&s fees in the guardianship proceedings in the amount of P$%,%%%
As to the deductibility of the amount spent for notarization of the deed of extra judicial settlement of estate- 3(pained estate- 3(pained the 4C, administration e(penses, as an aowabe deduction from the gross estate of the decedent for purposes of arriving at the vaue of the net estate, have been construed by the federa and state courts of the 5nited 4tates which the aw on aowabe deductions from gross estate was copied6/ to incude a e(penses 7essentia to the coection of the assets, payment of debts or the distribution of the property to the persons entited to it.7 0n other words, the e(penses must be essentia essentia to the proper settement settement of the estate. 3(penditures 3(penditures incurred incurred for the individua individua benefit of the heirs, devisees or egatees egatees are not deductibe. This distinction has been carried over to our jurisdiction. Thus, in Lorenzo v Posadas the . Posadas the Court construed the phrase 7judicia e(penses of the testamentary or intestate proceedings7 as not incuding the compensation paid to a t rustee of the decedent&s estate when when it appear appeared ed that that such such trustee trustee was appoin appointed ted for the purpose purpose of managi managing ng the decedent&s rea estate for the benefit of the testamentary heir. 0n another case, the Court disaowed the premiums paid on the bond fied by the administrator as an e(pense of administratio administration n since the giving giving of a bond is in the nature of a uaification uaification for the office, and not necessary in the settement of the estate. !either may attorney&s fees incident to itigation incurred by the heirs in asserting their respective rights be caimed as a deduction from the gross estate. 0n this case, it is cear that the e(trajudicia e(trajudicia settement settement was for the purpose of payment of ta(es and the distribution of the estate to the heirs. The e(ecution of the e(trajudicia settement necessitated the notariation of the same. 0t foows then that the notaria fee of P)%,*$+.%% was incurred primariy to sette the estate of the deceased Pedro Pajonar. 4aid amount amount shoud shoud then be considered considered an administratio administration n e(penses e(penses actuay and necessariy necessariy incurred in the coection of the assets of the estate, payment of debts and distribution of the remainder among those entited thereto. Thus, the notaria fee of P)%,*$+ incurred for the 3(traju 3(trajudici dicia a 4ette 4ettemen mentt shoud shoud be aowed aowed as a deduct deduction ion from the gross gross estate estate.. Deduct Deductib ibee e(pens e(penses es of admini administr stratio ation n of the estate estate may incud incudee e(ecut e(ecutor&s or&s or administrator&s fees, attorney&s fees, court fees and charges, appraiser&s fees, cer# hire, costs of preserving and distributing the estate and storing or maintaining it, bro#erage fees or commissions for seing or disposing of the estate, and the i#e. Deductibe attorney&s fees are those incurred by the e(ecutor or administrator in the settement of the estate or in defending or prosecuting caims against or due the estate. 1s to the deductibiity deductibiity of attorney&s attorney&s fees in the 4pecia proceedings proceedings-- 1s a rue attorney&s attorney&s fees in order to be deductibe from the gross estate must be essentia to the coection of assets, payment of debts or the distribution of the property to the persons entitled to it . it . The services for which the fees are charged must reate to the proper settement of the estate. +8 1m. Jur. 9d *)*./ *)*./ 0n this this case, case, the guardian guardianshi ship p procee proceedin ding g was necessary necessary for the distribution of the property of the ate Pedro Pajonar to his rightfu heirs. 0t is noteworthy to point that P!" was appointed the guardian over the assets of the deceased. !ecessariy the assets of the deceased formed part of his gross estate. 1ccordingy, a e(penses incurred in reation to the estate of the deceased wi be deductibe for estate ta( purposes provided these are necessary and ordinary e(penses for administration of the settement of the estate. :ence the attorney&s fees of $%, %%% is deductibe from the gross estate of the decedent.
Dizon v CTA (Taxation) Dizon v CTA G.R. No. 140944 April 30, 2008 FACTS: On November 7, 1987, Jose ! Fern"n#ez $Jose% #ie#! T&ere"'(er, " pe(i(ion 'or (&e prob"(e o' &is )ill )"s 'ile# )i(& *r"n+& 1 o' (&e -e.ion"l Tri"l Co/r( $-TC% o' "nil" $prob"(e +o/r(%! T&e prob"(e +o/r( (&en "ppoin(e# re(ire# S/preme Co/r( J/s(i+e Arsenio ! Dizon $J/s(i+e Dizon% "n# pe(i(ioner, A((! -"'"el Arsenio ! Dizon $pe(i(ioner% "s Spe+i"l "n# Assis("n( Spe+i"l A#minis(r"(or, respe+(ivel, respe+(ivel, o' (&e s("(e o' Jose $s("(e%! e(i(ioner "lle.e# (&"( sever"l re/es(s 'or e4(ension o' (&e perio# (o 'ile (&e re/ire# es("(e ("4 re(/rn )ere .r"n(e# b (&e *5- sin+e (&e "sse(s o' (&e es("(e, "s )ell "s (&e +l"ims "."ins( i(, &"# e( (o be +oll"(e#, #e(ermine# "n# i#en(i'ie#! 5SS6S: CTA "n# (&e CA .r"vel erre# in "llo)in. (&e "#mission o' 1. &e(&er or no( (&e CTA (&e pie+es o' evi#en+e )&i+& )ere no( 'orm"ll o''ere# b (&e *5- "n# 2. &e(&er (&e "+(/"l +l"ims o' (&e "'oremen(ione# +re#i(ors m" be '/ll "llo)e# "s #e#/+(ions 'rom (&e .ross es("(e o' Jose #espi(e (&e '"+( (&"( (&e s"i# +l"ims )ere re#/+e# or +on#one# (&ro/.& +ompromise ".reemen(s en(ere# in(o b (&e s("(e )i(& i(s +re#i(ors Or &e(&er or no( (&e CA erre# in "''irmin. (&e CTA in (&e l"((ers #e(ermin"(ion o' (&e #e'i+ien+ es("(e ("4 impose# "."ins( (&e s("(e!
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