CTA Case No. 23029 (Decision)

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ftft:PUBLIC OF THE PHILI!'PINES COJKf OF TAX A.P.PEALS MANlLA UGLAS FISHER and NI CIVIL El'TI FI HE , C SE � 2 29 Pl intiffs , - ve u fe da � x~ - - - � --- ~ - ~ - - -x I concur in for goi n j- rity, xc pt h portio ro i cl h l d at �th int n ible peruonal rty 1 n i th sta e of ~i Jt v so i x p fr , i eri a e tax, pursuant th rovi of sec i n 12 of tion l Il rn 1 cv i r ti n to h Calif o ia Inl i t s ax .~..a � ci 12 Rev ue Cod provi es -- In rder tha p rson 1 pr p rt. i - uat i n th Philip in s el ng t es as on- si .t a tle t� hi ,ay - ;< 58 ...

', - � - 2 .. pt fro transf r taxes or death taxe , it is es - tial th t the fo i n country of �hich h d e a ed � as a resid nt at th tim of his dea h (1} did not � impos a tr nsfer ax or death tax of any character � in r spect of in-t n ible p rsonal prop rty of hil- � ippine citizens not residing in th t for ign country, � or (2} allo ed a similar exemption from tr nsf r taxes r d ath t xe of ev ry eh racter in re pee f intan- gible p r onal property own d y hilippin citiz ns not resid ing in that for ign coun ry. It is admit ed that the tat of aliiornia � po d n inheritance tax at th ti e of d at� of th d a d alter � t venson , who ~as resid nt of ta � h r - fore, xe ption fro any ran f r t x or de t tax of intangi le p rsonal property in t e Philippin s f th deceas d 'alter � t venson may not cl � ed und r th firs por ion of th provi quot a ov � It r mains t b se n h th r x ption ay b clai e under the econd por ion of he provi o. Th s cond portion f the proviso f cti n 122 of the Rev nue Code , d a ve , requir as co - clition for ex ption f ro transfer ta xe or de t h tax s of intangibl p rsonal property of ece sed non-re- sident that the foreign country of hich the d ce a r sid nt allo ed Sbm~la~ exe ption f r taxes or deat cter in resp ct of intangibl personal prop rty o n d by hilippin citi- zen not r sidi in that foreign country. In the in- �' 58 9

IO � stant ease , the California la grant r c iprocal ex� mption only i t h r sp ct to t 1 heritanc tax ' f or � t hat i t h only t r ansf r ta x or �eath tax t hat it � imposes . Th F ral la of the Unit d t at es i - pos s e state and gift ax s d said la authori~ s no ex mption on the b sis of r ciprocity. The tat .e of C liforn ia is, there� re , in no position to r nt rec iprocal emption ith r . spect to st_at_e and ift taxesi' ur l aw does not recognize partial reciproc ity. I t grant s reciproc al xempt ion , in clear an spec ific t erms, e nl y if the fo ign c o ntry whose law is in� � estate, inheritance and gift tax s imposed by Title III (See s . 85- 122) of he Revenu Cod � The Cali� f ornia law certainl y does not grant a ~~~~~-- 'oreover, the opinion of the majority that re- c i procal exe ption may be grant d only ith respec to the inheritance tax does n t m ~t th requirement of th California Inh itance Tax Law , which provides: was a State ' X X X X 590

.. 4- The reciprot 1 ex P"*'ion pr vid.ed in the Califo!'nia Inherit ce Tax La re ires s a condition f r the ,� all .ance f xe pti n that the foreign la allo a ority that � e ay gr nt exemption from the inherltane tax in r pee. . f i .tangible personal property in the Philippi �� 10 by resi nt� of Callforni an , enr exemptie fr th e tate tax ( �� 8~. at. Int. v. Code), e California ay ot g:rant any ex ption in l"espect i intangible personal � �operly of l>hilippine c.J.ti&_tn$ not res.icU.ng therein ecause its law re~.tres that. the .Philippine law ust allow �imii�t ''I ;jip~ � fre ltgasx. 'YSit.ll~tn 91' slttth i�lt' �i~ tvtrx cbf:'. �1&\e#. Lik� tile Philippine .1 ,. the ,Californ .. /1 oes not obvi usly recognize paJ>t.lal recip~octty� .Tht nsult ul � that. whiie �� ou1d b exe ptin~ r � sident1 of California fr in er1tance tax n �their intang l� personal pro erty in the P lippine_st r sJ.dJ.ng in Cal.ifJu'nia rni t not b � 1~ lowe simil~r eaempti n n er the California la � 591

.' CDfQIRDlG Dl ENtlNG � PIN:D � 11A CDll. CASE � 23029 I do not bell ve that uc;h a result i$ in keeping with the spirit and purpose .of tM reciprocity pro- ��!sions here involved . OR T ,opinion that the reeipro~al exe pt.ton fro trans.fex- t .axet or gift taxes provided in ection 122 of t � e Revenue ~de d es not apply t intangible personal property in the Philippines owned by resident of the State Gf California, such as the deceased alter G. Stevenson. , i' 592 .......