The BIR is not correct in imposing donor’s tax on the renounced inheritance of Mrs. Barbera from Mr. Barbera. According to Section 11 of the RR No…

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The BIR is not correct in imposing donor’s tax on the renounced inheritance of Mrs. Barbera from Mr. Barbera. According to Section 11 of the RR No. 2-2003: “General renunciation by an heir, including the surviving spouse, of his/her share in the hereditary estate left by the decedent is not subject to donor’s tax, unless specifically and categorically done in favor of identified heir/s to the exclusion or disadvantage of other co-heirs in the hereditary estate.” On the other hand, the BIR is correct in imposing donor’s tax on the renounced conjugal share of Mrs. Barbera. This is because Section 11 of RR No. 2-2003 provides that “renunciation by the surviving spouse of his/her share in the conjugal partnership or absolute community after the dissolution of the marriage in favor of the heirs of the deceased spouse or any other person/s is subject to donor’s tax.” This proceeds from the rule that the share of the conjugal property is the share of the surviving spouse. Thus, the surviving spouse is effectively donating property when he or she makes a renunciation. Tong Siok, a Chinese billionaire and a Canadian resident, died and left assets in China valued at P80 billion and in the Philippines assets valued at P20 billion. For Philippine estate tax purposes the allowable deductions for expenses, losses, indebtedness, and taxes, property previously taxed, transfers for public use, and the share of his surviving spouse in their conjugal partnership amounted to P15 billion. Tong's gross estate for Philippine estate tax purposes is: (2011 Bar Question)

1. A.P20 billion.
2. B.P5 billion.
3. C.P100 billion.
4. D.P85 billion.

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