BIR Ruling

September 6, 1974 Atty. Rafael B. Legaspi 1245 Acacia Road, Dasmarias Village Makati, Rizal S i r : This refers to your letter dated August 6, 1973 requesting information whether your client, Mrs. Socorro E. Palomata, as administratrix of the estate of the late Bienvenido E. Palomata, is liable to the payment of the estate and inheritance taxes on the amount of $11,633.09 received by her as compensation for the death of her son. The letter of Atty. Anthony J. Herdorella dated July 25, 1973 who represented your client and won an award for compensation from the Seres Shipping, Inc., New York, U.S.A., and other pertinent documents attached thereto show that the aforesaid amount received by Mrs. Socorro E. Palomata, as beneficiary and direct heir, partakes of the nature of compensation for the death of her son and not as an insurance payment. In reply thereto, I have the honor to inform you that, if as represented, the amount received by your client is in the nature of compensation for the death of her son and not as an insurance payment, it does not form part of the gross estate as defined under Section 88 of the Tax Code, viz.: "Sec. 88 Gross estate . The value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated, except real property situated outside the Philippines (Emphasis supplied) xxx xxx xxx The said payment is in the nature of compensation for injuries resulting in the death of an employee who was a seaman in the Seres Shipping, Inc. which is excluded from gross income under Section 29(b) (5) of the Tax Code and which is not also includible as part of the gross estate under Section 88 of the Tax Code without any express or specific provision to that effect, the reason being that the amount paid to the beneficiary or immediate heirs of the deceased did not yet exist at the time of his death but is contingent and dependent upon the successful prosecution of the claim or lawsuit for the payment of the said amount as death compensation. In view thereof, this Office believes and so holds that the amount received by your client as compensation for the death of her son is not subject to the estate and inheritance taxes, nor is it subject to income tax. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."