1. Depending on the pendency of the settlement, the estate through the executor, administrator or his heirs is liable for the payment of the estate income tax. [Sec. 60 (3)]

2. If upon the termination of the judicial settlement, when the decision of the court shall have become final and executory, the theirs still do not divide the property, the followig possibiliteis may arise:

     a. If the heirs contribute to the estate money, property, or industry, with the intention to divide the profits between and among them, an unregistered partnership is created and the estate becomes liable for the payment of corporate income tax. (Evangelista vs. Collector, 102 Phil 140)

     b. If the heirs without contributing money, property or industry improve the estate, simply divide the fruits thereof between and among themselves, a co-ownership is created and individual income tax in imposed on the income derived by each of the heirs, payable in their separate and individual capacity. (Pascual vs. Commissioner, 166 SCRA 560, and Obillios vs. Commissioner, 139 SCRA 463).