Donation can be deducted from gross estate of decedent

Dear PAO,

My aunt passed away in February 2018 and left properties under her name. Before she died, she
donated a parcel of land to the local government of her home province, which shall be used as
part of a public road. We are now preparing for the filing of my aunt’s estate tax return. Can we
deduct the said donation in computing for her taxable net estate?

Rodel

Dear Rodel,

Please be informed that Section 86 (A) (6) of the National Internal Revenue Code, as amended
by Republic Act 10963, otherwise known as the “Tax Reform for Acceleration and Inclusion
(TRAIN)” provides:

“(A) Deductions Allowed to the Estate of Citizen or a Resident. – In the case of a citizen or
resident of the Philippines, by deducting from the value of the gross estate –

xxx

(6) Transfers for Public Use. – The amount of all the bequests, legacies, devises or transfers to or
for the use of the Government of the Republic of the Philippines, or any political subdivision
thereof, for exclusively public purposes.”

xxx.”

In your situation, your aunt donated a parcel of land to and for the use of the local government of
her home province, which shall be used as a public road. Conversely, the said donation amounts
to a transfer for public use considering that the property shall be used for a public purpose.
Hence, the value of the property donated can be deducted from your aunt’s gross estate in order
to arrive at the proper taxable net estate.