CHAPTER XESTATES
AND
TRUSTS
SEC.
60. Imposition of Tax. -
(A) Application
of Tax.
- The tax imposed by this Title upon individuals shall apply to the
income
of estates or of any kind of property held in trust, including:
(1) Income
accumulated
in trust for the benefit of unborn or unascertained person or personswith contingent interests, and income accumulated or held for future
distribution
underthe terms of the will or trust;
(2) Income which
is
to be distributed currently by the fiduciary to the beneficiaries, and
incomecollected by a guardian of an infant which is to be held or distributed
as the court may direct;
(3) Income
received
by estates of deceased persons during the period of administration orsettlement of the estate; and
(4) Income which,
in the discretion of the fiduciary, may be either distributed to the
beneficiariesor accumulated.(B) Exception.
- The tax imposed by this Title shall not apply to employee's trust
which forms part of a pension, stock bonus or profit-sharing plan of an
employer for the benefit of some or all of his employees (1) if
contributions
are made to the trust by such employer, or employees, or both for the
purpose
of distributing to such employees the earnings and principal of the
fund
accumulated by the trust in accordance with such plan, and (2) if under
the trust instrument it is impossible, at any time prior to the
satisfaction
of all liabilities with respect to employees under the trust, for any
part
of the corpus or income to be (within the taxable year or thereafter)
used
for, or diverted to, purposes other than for the exclusive benefit of
his
employees: Provided, That any amount actually distributed to
any
employee or distributee shall be taxable to him in the year in which so
distributed to the extent that it exceeds the amount contributed by
such
employee or distributee.
(C) Computation
and Payment.
-
(1) In General.
- The tax shall be computed upon the taxable income of the estate or
trust
and shall be paid by the fiduciary, except as provided in Section 63
(relating
to revocable trusts) and Section 64 (relating to income for the benefit
of the grantor).
(2) Consolidation
of Income of Two or More Trusts. - Where, in the case of two or
more
trusts, the creator of the trust in each instance is the same person,
and
the beneficiary in each instance is the same, the taxable income of all
the trusts shall be consolidated and the tax provided in this Section
computed
on such consolidated income, and such proportion of said tax shall be
assessed
and collected from each trustee which the taxable income of the trust
administered
by him bears to the consolidated income of the several trusts.
SEC.
61. Taxable Income.
- The taxable income of the estate or trust shall be computed in the
same
manner and on the same basis as in the case of an individual, except
that:
(A) There shall be allowed
as a deduction in computing the taxable income of the estate or trust
the
amount of the income of the estate or trust for the taxable year which
is to be distributed currently by the fiduciary to the beneficiaries,
and
the amount of the income collected by a guardian of an infant which is
to be held or distributed as the court may direct, but the amount so
allowed
as a deduction shall be included in computing the taxable income of the
beneficiaries, whether distributed to them or not. Any amount allowed
as
a deduction under this Subsection shall not be allowed as a deduction
under
Subsection (B) of this Section in the same or any succeeding taxable
year.cralaw:red
(B) In the case of income
received by estates of deceased persons during the period of
administration
or settlement of the estate, and in the case of income which, in the
discretion
of the fiduciary, may be either distributed to the beneficiary or
accumulated,
there shall be allowed as an additional deduction in computing the
taxable
income of the estate or trust the amount of the income of the estate or
trust for its taxable year, which is properly paid or credited during
such
year to any legatee, heir or beneficiary but the amount so allowed as a
deduction shall be included in computing the taxable income of the
legatee,
heir or beneficiary.cralaw:red
(C) In the case of a
trust administered in a foreign country, the deductions mentioned in
Subsections
(A) and (B) of this Section shall not be allowed: Provided,
That
the amount of any income included in the return of said trust shall not
be included in computing the income of the beneficiaries.cralaw:red
SEC.
62. Exemption Allowed to Estates and Trusts.
- For the purpose of the tax provided for in this Title, there shall be
allowed an exemption of Twenty thousand pesos (P20,000) from the income
of the estate or trust.
SEC.
63. Revocable Trusts.
- Where at any time the power to revest in the grantor title to any
part
of the corpus of the trust is vested (1) in the grantor either alone or
in conjunction with any person not having a substantial adverse
interest
in the disposition of such part of the corpus or the income therefrom,
or (2) in any person not having a substantial adverse interest in the
disposition
of such part of the corpus or the income therefrom, the income of such
part of the trust shall be included in computing the taxable income of
the grantor.
SEC.
64. Income for Benefit of Grantor.-
(A) Where any part of
the income of a trust (1) is, or in the discretion of the grantor or of
any person not having a substantial adverse interest in the disposition
of such part of the income may be held or accumulated for future
distribution
to the grantor, or (2) may, or in the discretion of the grantor or of
any
person not having a substantial adverse interest in the disposition of
such part of the income, be distributed to the grantor, or (3) is, or
in
the discretion of the grantor or of any person not having a substantial
adverse interest in the disposition of such part of the income may be
applied
to the payment of premiums upon policies of insurance on the life of
the
grantor, such part of the income of the trust shall be included in
computing
the taxable income of the grantor.
(B) As used in this
Section, the term 'in the discretion of the grantor' means in the
discretion
of the grantor, either alone or in conjunction with any person not
having
a substantial adverse interest in the disposition of the part of the
income
in question.
SEC.
65. Fiduciary Returns.
- Guardians, trustees, executors, administrators, receivers,
conservators
and all persons or corporations, acting in any fiduciary capacity,
shall
render, in duplicate, a return of the income of the person, trust or
estate
for whom or which they act, and be subject to all the provisions of
this
Title, which apply to individuals in case such person, estate or trust
has a gross income of Twenty thousand pesos (P20,000) or over during
the
taxable year. Such fiduciary or person filing the return for him or it,
shall take oath that he has sufficient knowledge of the affairs of such
person, trust or estate to enable him to make such return and that the
same is, to the best of his knowledge and belief, true and correct, and
be subject to all the provisions of this Title which apply to
individuals:
Provided, That a return made by or for one or two or more joint
fiduciaries filed in the province where such fiduciaries reside; under
such rules and regulations as the Secretary of Finance, upon
recommendation
of the Commissioner, shall prescribe, shall be a sufficient compliance
with the requirements of this Section.
SEC.
66. Fiduciaries Indemnified Against Claims for Taxes Paid.
- Trustees, executors, administrators and other fiduciaries are
indemnified
against the claims or demands of every beneficiary for all payments of
taxes which they shall be required to make under the provisions of this
Title, and they shall have credit for the amount of such payments
against
the beneficiary or principal in any accounting which they make as such
trustees or other fiduciaries.
