[ ott 17- Donor’s Tax pTER 17 aor’ TAX ool pter Overview and Objectives -"< chapter, readers afte erstand and master the Peed to; 1 ggpreciate the valuation ryigg ae Bro ; aster and comprehend the ligt @ation } comprehend the presentation ang duction rom deductions in the donor's tay Tetum Porting of iene st » Fs git ang ue DONOR'S TAX FORMAT ‘he ponor’s Tax Model: ross Gift fas: Deductions from Gross Gift Fite net Gift —x whenever a taxable donation is ma; 5 ide, g reported in a donor’s tax return, the net git is determined and ‘the Donor’s Tax Format: Personal property Real property ‘Total gifts in this return Less: Deductions Total net gift in this return Add: Prior net gift during the year Total net gift subject to tax Tax due Aggregate tax due Less: Tax credits Tax payable or refundable ance of the net Wote thatthe donor's taxis imposed onthe comuthe tT) Bi. The accumulation of net gifts stopsat ever” 561Chapter 17 — Donor’s Tax GROSS GIFT Gross gift pertains to the fair value of a taxable donation, SPECIAL CONSIDERATIONS ON GROSS GIFT 1, Valuation rules 2. Timing of valuation of donation 3. Donation of common properties 4. Donation to joint donees 5. Encumbrances on the property donated VALUATION OF GROSS GIFT The valuation of properties for purposes of donor's tax follows th rules as those of estate taxation, namely: ee same A. Real property - the higher of zonal or assessed value (Sec. 102, ny B. Personal properties - fair value 1. Shares of stock a. If listed in the PSE - the closing price of the stocks at the date donation ok b. Ifnot listed: i, Preferred stocks - par value ii, Common stocks - the book value to be determined under the Adjusted Net Asset Value Method (RR6-2013) 2. Other properties - a. Newly purchased - purchase price b. Old items - second hand value cc. Monetary claims - the amount fixed in the contract RC) Ilustration 1: Fair value of real properties Mr. H donated a parcel of land in favor of his son. The land had a zonal value of 3,000,000, an assessed value of P2,000,000, and an independent appraisal value of P4,000,000. The amount to include in gross gift shall be P3,000,000. Independent appraisal value shall not be used in accordance with the NIRC. Mlustration 2: Fair value of old items Fl Tony donated a Toyota Fortuner to his brother Andrew. The car was acquire five years ago at P1,800,000. At the date of donation, the car was saleable aS second hand at P1,000,000 but was subject to a P500,000 mortgage. 562 =——_—— aa[ 47- Donor’s Tax rer por ion shall be included i ation sha juded in - we roperty shall not be offet 4 Sift at py ohet resented se "om 009, 8 wi yee donee. Y in thers eun ea5 a TS tay Pte Me erative 3: Fair value Of listed sing ™ 05 4 an si rion, rporati 000 op Ta ading prices on june shareg "2S ofthe owin M4, 2014, SOF Albatron SS of 4 fol . s 8 Coy ration aes opening PICS tradi > ad th est intra-day trading price 80009 6 st intra-day trading price P 870.09 untae trading price 77000 nt trading price mile 0 spe donation shall be included in gros gt po 0 000). 1000, compute, ansten ive 4: The Adjusted Net As iqustrative ery Migs Beauty donated her 1,000 stocks holding at Mines, a closely-held corporation, The latest balance mo” seks of Suyac Mielosed the following: ch ete qotal assets mo Less: Total liabilities 000,000 gockholder’s equity (1,000,000 shares) B45 9009 atthe balance sheet date, the entity disclosed the following assets with fair values different from their recorded book values: ‘Tax declaration Independent Book value fair value onal value_| appraisal land P 2,000,000 | P.2,500,000 | P5,000,000 | P 6,000,000 Building 1,500,000 P 2,000,000 72,500,000 | _2,400,000 Investments 500,000 | With quoted marke price of P00.000, of the Under the Adjusted Net Asset Value Method, the ones hi investee corporation shall be adjusted to thei far ma the : tion, real properties of Only for the purpose of this fair value determi ano il investee corporation shall be assessed atthe highs tonal value and independent appraisal va lue. 563ON Chapter 17 — Donor’s Tax The following shall be the adjustments to assets: Bookvalue —Fair value Land P2,000,000 =P 6,000,000 P 4,000, 00 Building 1,500,000 2,500,000 1.000.000 Investments 500,000 800,000 oa Total increase in asset fair value pS ayuooo 30 The fair value of the each common stock of Suyoc Mines s| follows: all be computey « Book value of assets P20,000,000 Add: Increase in value of assets Adjusted fair value of assets P25,300,000 Less: Liabilities Fair value of net assets 20,300,000 Divided by: Number of shares Fair value per share P___2030 The donation of Miss Beauty shall be reported in gross gift at P20,300, com as P20.30 x 1,000 shares. venue TIMING OF VALUATION OF GROSS GIFT Donation is valued at the point of completion or perfection of the donation, Donation is perfected upon acceptance by the donee. In conditional donations, the donation is completed and perfected upon satisfaction by the donee of the terms of donation or upon waiver by the donor of the conditions. Ilustration 1: Revocable donation Mr. A made a revocable transfer of a residential property in favor of his brother B. The value of the property was P3,000,000. B's family moved to the property when it was worth P3,500,000. Mr. A subsequently waived his ownership and transferred title in favor of B when the property was worth P4,000,000. The donation shall be valued at P4,000,000 in gross gift. Illustration 2: Conditional donation On November 13, 2013, Mr. Cebu made a conditional donation to his brother, Talisay, involving an investment portfolio with an aggregate value of P3,000,000. The donation was contingent upon the latter’s passing of the cPA Board Exam. Mr. Talisay passed the CPA Board Exam on July 12, 2014 when the value of the portfolio was P2,400,000. Three days later, Mr. Cebu died. The investment portfolio was worth P2,500,000. 564[ er 17- Donor’s Tax not ie te ions pubject te te “ror was living at the time estat, sf! a OF bey © tay 9) ene property at the time ofhis tion oth but tg 4 ww eat Edna MP tay unt to be reported in "Mr. Ce on the ‘Onger jm : ro fhe 21.4, upon completion of the ens Sift shay fl Contract oy fl be 000, on, 00, ty ant ide theses ofthe donor'stax. as Separate ang di pu listing i f conjugal or commun; Vers for onation Of Munity pro gpl file SEPATAKE SONOS tax returns fre TH hang lation, wever, if what was donated is a conj fe husband signed the ded of dong there so - 'Y property ql ‘ane ix purposes vithou Prejudice to the right of yon dorer br dane raiity of the donation without her consent queso? yrovisions of the Civil Code of the Philippines Pursuant to : pertinent philippines: and the Family Code of the lustration \ é 4 fr and Mrs. Japson donated a brand new car wort his graduation. th P2,000,000 to their son on Mr Japson shall report half of the donation ins dona’ tare slows i Relatives _Strangers_ { Personal property P 1,000,000 P 0 Mrs. Japson shalll also separately report half ofthe donation inher donor's tax return as follows { Personal property DONATION TO JOINT OR SEVERAL DONEES re split acording tte Donations to joint donees or several donees at inasinge r ane eported ina sit number of donees. Donations made ina SMB to aang sal donor’s tax return. Donations to relatives be separately presented in the retum 565 elChapter 17 - Donor’s Tax jon 1 pias marriage ceremony of his son and his daughter-in-law, donated a parcel of land jointly to the spouses. The lang bia e Candidy 2,700,000. Value of This donation shall be presented in the donor's tax return as follows, { Real property Le 1. A daughter-in-law isa stranger since she isa relative by affinity, 2 The portion attributable tothe son shall be subject to progressive tay While th daughter-in-law shall be subject to a 30% flat tax. ato Illustration 2 ; Mr. and Mrs. Ander Desia made a donation of a con worth P6,000,000, in favor of their daughter and their son-in-law: The P6,000,000 donation shall be divided between Mrs, and Mr. Desi 38 don, with each donor presumed giving 3M. The 3M donation of ea or ch donor shall pe further subdivided for each donee; thus, P1.5M each for the daughter and th son-in-law. © jugal property, a TeSidence Mr. Desia shall report the following in his ss gift: —Relatives _ —Strangers_ { Real property P 1,500,000 P 1,500,000 Rescate report the following in her gross gift: Relatives Strangers P 1,500,000 P 1,500,000 Note: The daughter isa relative while the son-in-law is a stranger, Mustration 3 siness. Betty and Kitty are co mmon children of Mr. and Mrs. Rubio, Cathy is Mr. Rubio's recognized natural d; laughter with his first girlfriend. Each donor had P1.5M donation which Was further subdivided among the three donees. The donation to each donee shall be P500,000 (P1.5M/3). Betty and Kitty are relatives to Cathy is a relative to Mr. Rubio, but is a both donors, Stranger to Mrs, Rubio, 566t7- Donors Tax te! rar ig shall report th , pybiostall following in _ cuMBRANCES ON THE PROPppry mbrances on the property such id loans thereto which are to ae a un donee shall not be deducteg from : ide in gross gift shall be ireret®- gnc e Bross interest asst ated an agricul MangJuan dona ricultural lot Valued ar property Suess bya real eaten 72.00.00 bis brother The 750,000. His brother agree, ‘0 assume the mor ‘with unpaid balance tage, of The amount t0 be included in gros gt #1500,000 (Le. 2,000,000 -P500.000) danas ie and not the 7 DEDUCTIONS FROM GROss GIFT | Who can daim? Items of Deductions from Gross Gift Residents / | Non-resident Citizens | aliens 1._Dowry exemptions v tx 2. Obligations assumed by the donee Lv v_| 3__Donation to the government for publicuse | _7 y 4. Donation to accredited non-profit v vo] institution DOWRY EXEMPTION Dowries or gifts made on account of marriage ae ina eapid ‘within one year thereafter by parents to each oti PbO : natural, or adopted children to the extent of the is 567oN Chapter 17 = Donor’s Tax Requisite of deduction: 1. Timing: Dowry must be given before the celebration of within one year thereafter. 2. Qualified recipient: The donee must be a legitimate, or an adopted child. A recognized natural child is born outside wedlock but is ackn the biological father, A child born outside wedlock oy !®4Red j, acknowledged by the biological father ts an ilegitimate ching ne, ng dowry to an illegitimate child is not deductible, ote that 4 he ma * MArrage 5 7 Fee eoRDIzed na, ral Mustration 1 Mr. and Mrs. X, citizens, donated their condo unit, a conjugal prope value of P1,200,000, as dowry to their daughter, Kathlyn Property, with a Case 1: Assume Kathlyn is a common child of Mr. and Mrs. X The net taxable gift shall be computed as; —MrnX __Mrs.X_ _ Gross gift P 600,000 P 600,000 Less: Dowry exemption 10,000 10,000 Net gift P__590,000 P__590,000 Mr. X shall report the following in his donor's tax return: prcreneecneernenennecnnenmaan { Real property P 600,000 P 3 ' } Less: Dowry exemption ——10,000 _ : ' { Net gift P 590,000 P . | Mrs. X shall report the follow! Pa cea ' —Relatives_ _Strangers Real property P 600,000 P Less: Dowry exemption 10,000 : Net gift 590,000 P Case 2: Assume Kathlyn is a child of Mr. X from a prior marriage The net taxable gift shall be computed as: —Mrx__ __Mrs.X_ Gross gift P 600,000 P 600,000 Less: Dowry exemption 10,000 0 Net gift P_590,000 Pp 600,000 568 ———al prope 2 e Y votuption ve wif 3, Assume Kathlyn is a chit, ofMrs.y elie axable gift shall be compute A former, das: eenage boy friend ane net® s it P es Dowry exemption 600,000 Deri netaift B00 p—~Leue 2000 2Sang09 eal property Less: Dowry exemption { Real property P 600000 P { Less: Dowry exemption 10000 __= | Net gift P 590000 P Case 4: Assume Kathlyn is an adopted child ‘The net taxable gift shall be computed as: Gross gift 7am Penna ian Dowry exemption psp Column where to report Balai ee 569 +. eeli . Chapter 17 - Donor’s Tax Case 5: Assume Kathlyn is an illegitimate chila OfMr.X With ances, The net taxable gift shall be computed as: er wo, man —Mr.X__ Mrs. X Gross git P 600,000 P 600,000 ess: Dowry exemption —_o . Net gift P_600,000 Pe00000 Column where to report —Stranger_ Stranger Mlustration 2 Mr. and Mrs. Y, non-resident citizens, donated a public P900,000 as dowry to their daughter, Hanna, vere who is gett Nsw was inherited by Mr. ¥ during his marriage, Betting married, The iat The property is an exclusive property of Mr. Y. He is the onl The net gift shall be determined as follows, '¥ donor in this case —Mny s Gross gift P 900,000 pet. Less: Dowry exemption Net gift P__890,000 Pp Mlustration 3 Johnny, a resident, made several donations married on June 1, 2014. as dowry to his son who is Betting January 1, 2014 P 2,000 June 1, 2014 5,000 March 15, 2015 2,000 July 1,2015 5,000 ‘The net gift on each donation shall be computed as follows: Date Gross gift’ Deduction _Net gift January 1, 2014 P 2,000 P 2,000 P 0 June 1, 2014 5,000 5,000 0 March 15, 2015 2,000 2,000 0 July 1, 2015 5,000 - 5,000 Note: 1. Dowries are deductible up to a total of P10,000 as long.as they are made before or within ‘one year from the celebration of the marriage. 2. The remaining P1,000 unused dowry exemption cannot be deducted from the July \ 2015 donation since this is already beyond one year from the celebration of the marriage Mlustration 4 . Mr. Bombay, a non-resident Indian citizen, donated PS0,000 in daughter who is getting married in the Philippines. ash to his 570set 47-Donor’s Tax ral net gift shall be P50,009, donors to the exclusion orp"? exe NON-res dation wer IGA bq TIONS ASSUMED BY THe *Maliene "om ou, ations on the donate pra DONee to Pee or gui ions to the Ne ution: Bratuity ago Y Wh guttents of debt and arg p2Tuing a Te ass mane ofthe donation," Baty © the dotted IY; han Ee pe the , these These ane ate yystration 1 re ded ous sepa donated a9 aercuy fmnbered BY an PBM mortgage Nt hissy « Sao, eat npaid real ‘ad vary 9,000 UnP Property tay ol Value of 2%. The papio.asst med the real property tay Sayno asoumeg OM The whic vas *d the mon and net gift of Don Pablo shall be Mortgage ya had ‘he computed While Do s gross ait ; Hex obligations assumed by dong 2000, netgift ote: tein obligation assumed by the donor ‘economic benefi dng totheane.” ‘he donation shall be indicated under the) 1 ot ede the elatives column, ilustration 2 pon Pedro donated 25 buffalos with an agar aggregate sot, Juan, The donation was sujet risa of P500,000 to his the donor's tax on the transfer. Mn that Juan shall assume The net gift shall be P500,000, The donor's tar isnot «deductions present obligation on the property at the date of donation. arbres sa ; a deduction for the donor's tax would require a prohibitively compe algebrae calculation to establish the amount of the tax DONATION TO THE GOVERNMENT FOR PUBLIC USE Gifts made to or for the use of the national government or any entity created by any of its agencies which are not conducted for profit or to any political subdivision of the said government are exempt from dono’ tax. subdivision llustration 1: Donation to the national government political {and non-profit agencies Mr. Escala donated a large comm: school. bli ria ot valuing P5000.000 f° 2 HNC sl a.ON since a public school is a government instrumentality renderin public function and is non-profit the net gift shall be computed ag’ ° €senyy Chapter 17 - Donor’s Tax Gross gift P 50,000,000 Less: Donation to the government for public use . Net gift Pog Note: This is not a taxable donation and is non-reportable for purpos taxation. eS of ation. ono, Illustration 2: Donation to Government-owned and controlled Mr. Escala donated P100,000 worth of goods to the Lan oP erations Bank Philippines. Of the Land Bank is a government-owned and controlled corporation proprietary rather than non-profit in nature. Hence, the net noe is computed as: BHT shall be Gross gift P 100,000 Less: Donation to the government for public use 0 Net aif P_100,000 Note: The donation shall be indicated under the column “Strangers.” DONATION TO ACCREDITED NON-PROFIT INSTITUTION Gifts in favor of an educational and or charitable, religious, cultural or social stitution, accredited nongovernment organization, trust, or philantrophic organization or institution are exempt from donor's tax (See Sec. 101 (A) (3), NIRC). Requisite for exemption 1. Not more than 30% of said gift shall be used by such donee for administrative purposes. The donee entity must be organized as a non-stock entity. The donee entity does not pay dividends. The donee entity's board of trustees earns no compensation. The donee entity must devote all its income, donations, subsidies, or other forms of philanthropy to the accomplishment and promotion of its purposes enumerated in its Articles of Incorporation. Pen In practice, donee entities are accredited by the applicable government agency. Donations to accredited donee institutions are exempt. Donations to non-accredited donee institutions are taxable. 572q se 47 - Donor’s Tax P al ca Agencies the accreditatj ously tne at tion of “ippine Council for NGO Ce fonee fa poe he accreditation function vation ens 7, * 2007 the following government gn IC). ap" hay 713 ne ment of Social Wergnt tities, sed Ute ya! . P%al welfare organization, eCtive oe 16, No, ae S, fo ‘pr ot jimited to those enga aa indatins ahr ers0ns, O14€F PerSOnS, Welfare nou ca ge - eVelone ‘ncuding jor p . artment Of Science and Techno’ Opmeq, family, cSt ~ for disableq jentific activities ippine Sports Commis philippine SP* mission — iational Council for Culture aaa Sons dev Meh and othe commission on Higher Education — 3," altar, educatio ites al at ties ation 1 {sidoro donated PS00,000 to pip, (f ; AK, Mr ished in the Cordillras 2 nono al Organization Kis a donee cultural ip IBA organizatic a Peiing agency (the Nationa Coe cet 8 te gqallbe exempt. The net gift shall beni lure and Spars tec } be dnaton i sIBAK 1s « non-accredited done ogo Tenet git shall be P500,000 and shall be conse tl eb red as a donation toa stranger. Gratuitous Donations to Associations Associations do not qualify as exempt donee inst (a)Q) of the NIRC. Hence, endowments ouiisteauel oie not exempt from donor's tax. All donations to associations for tax anes must be covered by a donor's tax return (RMC 53-2013). onerous donations to associations Donations with an onerous cause are not in the nature of an endowment or donation, They are in the concept ofa fee or pric in excangs fre performance of a service, use of property, or delve ofan ob (id) Ilustration Europa Condominium Hom members in exchange for stic and toll fees for the maintenance of 1 acepts donations from Associatior je Owners Asso yin ther subs oad skers for the right ‘of way In ‘the road. se Howse my The donation in this case és not subject 0 oreu 92013) toincome tax and VAT or percentage 2% 573 —_S”-—“‘CoN Chapter 17 — Donor’s Tax Diminution of Gift as Specified by the Donor The donor may specify that a portion of the donation i another person other than the donee. Diminution is ioe on Biven ty donor's tax. It is merely a deduction against the original donation met from Ut it itself another form of donation from the same donor whi, i to donor's tax. ch may be subjal Ubject Illustration 1 Armando donated P500,000 cash to his older sister subject to the con, she will give P100,000 to her nephew. ‘ondition thay ‘There are two donations in this case: —Sister_ Nephew Gross gift P 500,000 > P 100,009 Less: Diminution of gift 100,000 ae Net gift P_s90000 = B_j0g0m Note: The net gifts of these two donations shall be reported. The P500,000 tot con the two donations shall be included under the column “Relatives”, al net gis Mlustration 2 Roy donated P800,000 to his son, Rod, on condition that Rod shall t P200,000 to Bantay Bata, an accredited social welfare institution, san Rod Bantay Bata Gross gift P 800,000 ;>P 200,000 Less: Deduction 200,000— __ 200.000 Net gift P__600,000 oo Note 1. The P600,000 net gift shall be reported under the column “Relatives.” 2. The donation to an accredited non-profit institution is exempt and is non- reportable. DONOR’S TAX RETURN Any person making a donation (whether direct or indirect), unless the donation is specifically exempt under the Code or other special laws, is required to accomplish under oath a donor's tax return in duplicate for every donation, Note that the law requires duplicate copies. In practice, the return is filed in triplicate copies. Two copies will be taken by the BIR. One copy will be the taxpayer's copy. 574pte 17-Donor’s Tax ch aang Date. fern em fer vareln any prontins mage pectin Previousneepa® 2 Oi ‘ Made jn ent ide. yy one retur is Tequited fog inthe Sdn’ SPP aty only “ro several donees. Ifthe 4, "atin ear, 8 the yeap wa spouse shall file a sepa, ation ise one each * i er ‘ny asi in the conjugal or co, © return coe MBA oF on wale pare PMU po dg Ma it content of the donor's tax retuy thee reece frereturn shall set forth: aM rach gift made duri 1 Each gif during the caleng computing net gifts; ter vi ‘The deductions claimed and aj 1510 be in 2 ny previous net gifts made anor hdd ig 4. The name of the donee; 8 the same. caend é Relationship of the donor to the do, IT Year, + Such further information asthe cont NSN a rei where to file the return? xcept in cases where the Commission fo fled and the tax paid toany of the olen ern Fem the 3 ly of the following: turn shall "An authorized agent bank . b. Revenue district officer ¢ Revenue collection officer d. Duly authorized treasurer of the ci i aomiciied ity or municipality where the donor is e. Office of the Commissioner, if the taxpayer has nol a 1 oe 10 legal residence inthe a DONOR’S TAX COMPUTATION AND REPORTING The computation of the donor's tax is on a cumulative basis over a period of one calendar year. The net gift of every taable donation during the yea" determined and the additional tax is computed, reported, and pid to the government within 30 days from the day the git was made or completed. 575 eelChapter 17 - Donor’s Tax COMPREHENSIVE ILLUSTRATION Acitizen donor made the following cash donations to relatives in eet 2015, ~ Date Net gift Donees ° ba 1,2015 P__ 80,000 | Relatives October 15, 2015 200,000 | Relatives 50,000 | Strangers November 4, 2015 350,000 | Relatives December 1, 2015 100,000 | Strangers December 12, 2015 450,000 | Relatives [January 5, 2016 270,000 | Relatives Donations to relatives are exempt up to P100,000. The donation is ¢ the donor shall file a donor's tax return. Xempt, but This is presented in the donor's tax return a: —Relatives _ Total net gift in this return P 80,000 P Add: Total prior net gifts o ——_ 280,000 Total gifts subject to tax P = Tax due a i 7 Aggregate tax due P 0 | Less: Payments for prior gifts this year e anand Note: The tax return shall be filed within 30 days from the date of the donation (Le, July 1, 2015). Hence, this is due on or before August 1, 2015. October 15, 2015 donation Tax on donation to relatives: July 1 donation P 80,000 October 15 donation 200,000 Cumulative net gift P 280,000 = ___Tax Less: Lower amount of relevant bracket 200,000 P 2,000 Excess P 80,000 Multiply by: Bracket incremental tax rate 4% _ 3.200 Donor’s tax due P 5,200 Less: Tax due on prior donation to relatives Donor's tax payable P__5,200 Over Not Over Basie Tax | Plus % | Ofexcessover_| P_100,000 200,000 P 0 2% Pp 100,000 — 200,000 500,000 2000 [ 4% 200,000 576 —pte 17 - Donor’s Tay on donation to strangers, yer 15 donation oct ty by: Donor’ sy by: Donor’s tax rat ci ws tax payable efor Strapon, is presented in the d his is PI dl lonor's tay retin —~204 ee aan. fllgy, ny { a , —.. | qoval net gift in this return Se | add: Total prior net gifts + otal gifts subject to tax | te { taxdue Eytan 00 | ageregate tax due Pe es | ess: Payments for prior gifts parr | ax payable this year ar pose: The tax return Shall be fled within gyggreso—— Bap november 14, 2015, N30 days from onl October 15, july 1 donation L Pel tas on or bef ‘October 15 donation P0000 November 4 donation 200,000 cumulative net gift —350.000 230009 Cumulative net gift a en Less: Lower amount ofrelevantbracket saan F 3S 14,000 waltipy by: Bracket incremental ta oe : g tal tax rate r Donor’s tax due a | Less: Tax due on prior donation to relatives 5200 Donor's tax payable ean Over Not Over Basic Tax. Plus % | Ofexcessover_] P_200,000 P_500,000 P_ 2,000 4% P_200,000 500,000 1,000,000 14,000 6% $00,000 1,000,000 3,000,000 44,000 8% | 7,000,000] 577 grChapter 17 - Donor’s Tax ‘This is presented in the donor’s tax return as: Relatives _strang is return P 350,000 P ts for prior gifts this year Note: The tax return shall be filed within 30 days from November 4, ¢h December 4, 2015. NUS, on or jay December 1, 2015 donation - to strangers For presentation in the tax return, the donation is computed on a ¢ um basis: Mulatiy October 15 donation P 50000 December 1 donation ___ 100.65 Total gifts to strangers P isony Multiply by: Donor’s tax rate for strangers 2 Bay Tax due P 45,000 Less: Tax paid in prior donation to strangers _ Donor's tax payable P_ 30,000 Alternative Computation The donor's tax can be computed directly from the net gift as follows: Total gifts to strangers P 100,000 Multiply by: Donor's tax rate for strangers 40% Donor's tax payable P_ 30,000 This is presented in the donor's tax return as i Relatives _ Strangers 1! Total net gift in this return P - P 100,000 i Add: Total prior net gifts 630,000 50,000 t { Total gifts subject to tax P_. 630,000 P 150,000 : | Taxdue P 21,800 P__ 45,000 t | Aggregate tax due P 66,800 i Payments for prior gifts this year __36,800 H ‘payable P 30,000 i Note: The tax return shall be filed within 30 days from December 1, tint non er belt December 31, 2015, 578wl) ey 15 donation ost?” per 4 donation P em! We mber 12 donation zona ulative net gift 3Soont pnt ‘ower AMOUNt of rele su Van brace Pea ie by: Bracket in ti nly y icrementa an due al taxrate ° aaogy pra Orrax due on prior donat ‘or’ tax payable on to oe Telatives ar | over 7 500,000 7,000,000 3,000,000 otal net gift in this return ‘add: Total prior net gifts Total gifts subject to tax Tax due Aggregate tax due Less: Payments for prior gifts this year Tax payable ca zt Note: The tax return shall be filed within 30 days fom be : Decor 12 0 a oar before January 11, 2016. ‘tthe start of each calendar year, the accumulation of donations restarts to zero. Hence, this donation should no longer be added tothe 2015 donations. The tax shalll be computed as follows: January 5 donation — 270.000 Cumulative net gift P 270,000 ae Less: Lower amount of relevant bracket ae Excess ‘th ~——do Multiply by: Bracket incremental taxrat®, 28 53409 Donor’s tax due —! paso Less: Tax due on prior donation 1016 Donors tax payable on or before February +2 579 Ceit citizen, made the following donations li di ~ donation to his brother who is get getting married: pa ore 15 - donation to daughter on account of marriage: P300,000 ay 5 - donation to an accredited non- Profit research in, Stitution 30 - donation of land valued at P500,000 to Mr. Cati toa condition that the latter shall assume the P150, oon "'S father tax on the property aid Teal Gi ift=D i P 150,000 - Po P 150,000 P-300,000 - P10,000 dowry 290,000 P 400,000 - P 400,000 0 P.500,000 - P150,000 350,000 cumulative gift tax and the tax on each donation shall be: Cumulative Cumulative Previous Tax om P150,000 P150,000 P 1,00 p 0 pe 1,000 aed 290,000 440,000 11,600 1,000 10609 0 0 - : . Pisaers0 350,000 790,000 31,400 11,600. 19,800 Note: The donor's tax payables are due 30 days from the date of donation Integrated Ilustration 2 Mr. Andres, a non-resident citizen, made the following donations in 2014: © January 14, 2014 - P50,000 donated to his mother-in-law April 17, 2014 - A jewelry worth PS00,000 to Mrs. Andres July 12, 2014 - A residential lot worth P300,000 as wedding gilt to his sister and his brother-in-law who just got married August 18, 2014 - P 200,000 to a public school for public use _ December 25, 2014 - An agricultural land valued at P2,000,000 jointly to two brothers subject to the condition that his brothers will assume the ‘Mortgage on the property 580- Donor’s T; er 17 ‘ax avo folowing SHOWS an analy e 1 net ary 14 donation prttatge Oration, iy z donation i 25 donation 5 Petia , cere 35009 ‘ 108, gonation ERWEED spouses yg 1 Fyedonation 8 Pubischog tn 2 Ublic Se ene C NetGit —“yMelative Cumut P 150,000 lative 12 , Pp 1 juyenber 25 1,500, 150,009 a pecember 500.000 e990 Pea, osoble gift to strangers: 6,000 ° iat fait P {80000 S000 000 july 12 ,000 200.009? 15009 60,009 P 15.009 te: Mee Tne July 12 donation is reflected in 45.000 a Single doy and donations to strangers are pre tno i date ofeach do oc integrated Illustration 3 - Mr Mamoud, a non-resident alien, made th following donations in 201, Date ofdonation a seat Car Philipines jaa ‘August 2, 2016 and aoe. October 10, 2016 Shares of stocks Philippines 200,000 November 11, 2016 ‘aptop Pippin: 25080 Additional information: 1. The car was intended as a dowry for Mr. Mamoud's daughter of whois geting married in the Philippines. 2 The stocks were given to his best friend inthe Philippines | 3. The laptop was donated to his brother who is studying in the Pilippnes The taxable gift shall be: Taxable gift to relatives: Do Cumulative Cumulative Tax i Pp 6,000 P 6,000 pee p3oo,o00 P 300000 PSO Fs o99 November 11 250,000 550000 sat ——————— —Chapter 17 - Donor’s Tax Taxable gift to strangers: October 10 P 200,000 P.200,000 P-_ 60,009 P 6 Note: °.009 1. Dowry exemption is not allowed to a non-resident alien, 2 The donation abroad is not included in gross gift. A donation of Presumed taxable unless a reciprocity exemption is proven by the 4c "8Ibe pr, 3. The tax payable is due within 30 days from the date of each donng on Petry ig FOREIGN TAX CREDIT Residents and citizens with foreign donation may be subject donor's tax. To minimize international double tax: e ‘ation, our Orel credit for taxes paid in a foreign country. tax law allow Foreign tax credit is computed depending on whether a sin, country or multiple foreign countries are involved, Ble Foreign Foreign Tax Credit Limit: One foreign country The foreign tax credit shall be the lower of the actual foreign donor. and the following limit: BP donor's tax paig Foreign country net gifts X Philippine donor's t: World net gitts aoe Foreign tax Credit Limit: Multiple foreign countries The tax credit limit for each country is individually determined fist using th foregoing computations. ithe: The final foreign tax credit shall be the lower of the total of the donor's tay credit allowable per country and the world donor's tax credit limit computed as: Total foreign net gifts x Philippine donor's tax due World net gifts Mlustration 1: One foreign country A Filipino citizen made the following donations during the year: Philippines) __Abroad _ __Total _ Donation to relatives P 500,000 P 300,000 P 800,000 Donation to strangers 100,000 ______- Total P_600,000 P__ 300,000 P__900,000 Foreign donor's tax paid P__22,000 Philippine donor's tax paid during the year B__14,000 582te? 47 - Donor’s Tay ‘ni donor's tax due on the dona 800,000 glob; 'S Shaly queo" al don, be 10 oye 00 P100,000 global dont tora “meg my donor's tax due tion, togyeties ‘ a; 10! a neers 22009 eso credits computey as, donor's tax pai, y Neg al foreign x Paid wie (P300,000/P900,000 xp, 7 i reign OX credit-LOWER 00) — a spe donor's tax payabe sha be nee z otal donor's tax due Les oreign tax credit i Ri philippine donor's tax paiq 20,669 ponor's tax payable 5 rite istration 2: Multiple foreign counpg, Rouge fssume a resident alien made the flowing lonations dy TIN the ‘Year: parelatives P a 00 Torela ,000 P Testrangers 0, 300,000 pie rae otal P_500,000 Papo" Hogg 72a 700.000 ponor'stax paid B__ 56009 p P2009 cmt the tax que on the donations shall be computedas axdue on 700,000 global donation to relatives p Tat due on P300,000 global donation a strangers 26000 otal donor's tax due The donor's tax credit shall be determined as follows Per country tax credit: ‘Actual amount paid P 18,000 Country limit: (P300K/1M x P116K) __34800 lower amount P 18,000 Korea: Actual amount paid P 50,000 Country limit: (P200K/1M x P116K) Ba, 0 lower amount 44200 Total of tax credit allowable per countty 583 7SS Chapter 17 - Donor's Tax Total of tax credit allowable per country World tax credit limit: —~42.209 [(300K+200K)/1M x P116K tax due] Foreign income tax credit (LOWER) Pp fon ‘The donor’s tax payable shall be: Total donor's tax due acs P 116,000 Foreign tax credit P 41,200 Philippine donor's tax paid ___ 56.000 Donor's tax payable Ete 120 PRACTICAL CASE APPLICATION Aresident donor made the following donation in 2015: Date Net gifts Location Donees March 5,2015 P 300,000 Philippines —_ Relatives April 3, 2015 100,000 Philippines Stranger 000 May 7, 2015 250,000 Abroad* —_Relatives. 30.000 August 4, 2015 350,000 Philippines _ Relatives ? The donor paid P22,000 donor's tax on the foreign donation. Since tax credit cannot be computed until all donations throughout the year known, the donor's tax paid in the foreign country needs to be deducted ay preliminary tax credit. The final tax credit will be determined at year-end, May 7.2015 donation Tax due on P550,000 global donation to relatives P ~—-17,000 Less: Donor's tax paid on gift to relatives Tax paid, prior Philippines gifts P 6,000 Foreign donor's tax paid 22,000 ____28,000 Donor's tax payable* (211.000) i ‘cumulative gift to relatives is computed as P300,000 + P250,000 = P550,000." 2. This negative figure is simply ignored. The donor-taxpayer cannot ask for a tax refund or tax credit until determination of the final tax credit at year-end. A resultant positive amount is paid to the BIR.” 584pate? 17 Donor’s Tay 01 P900,000 global don, we ponor’s tax paid on Rift to yey paid prior gifts ~ py rear relative Tax i dotibr’s tae hilip, Pines es 8 ore Paid P por’ tax payable 6009 ye cumulative donation tg Reagg oe" "relatives com Pay ela, Ll ir i ent return at year. ‘n a na adjustment return at year. aoe M Arye donor ’s tax credit and the me 3 Mount of, me due on the donations shall be my Comp jaxdue on 900,000 global dona ton re due on P100,000 global dona Ky nto qoraldonor’s tax due trang tre foreign donor's tax credits compu e009 a: tual foreign income tax paid a it: (P250,000/P 1,000,000 x Peg foreign tax credit - LOWER “a pea the donor's tax payable shall be: otal donor's tax due Less: Foreign tax credit-final amount p 17999 Philippine donor's tax paid 46000 Donor’s tax payable co 00 tte: Th Philippine donor’ pid unger cp March 5, 2015 donation oe April 3, 2015 donation sno August 4, 2015 donation 10000 Total P_46,000Chapter 17- Donor’s Tax The final adjustment return shall be pres ol Total net gift in this return ‘Add: Total prior net gifts } Total gifts subject to tax { Tax due | heres } Less: Payments for prior gifts this year P 46,000 i Foreign tax credit 17000 | Total tax credit L Tax payable Tax credit is limited to residents or citizens It must be noted that the privilege to claim foreign tax credit is allow, tocitizen or resident donors at the time of donation. ed only Non-resident alien donors cannot claim foreign tax credit. This is due fact that their foreign donations are not taxable in the Philippines," Note, however, that their donation in the Philippines may also be subje to tax in their country. Even so, our donor's tax applies without ly ne credit for their foreign taxes. The country where the donation is located ne the priority right to taxation. - 586t ert? — Donor’s Tax ree 17: SELF-TEST EXERCIsps jon Questions ise merate examples Of taxable donar; nats 8708S BIR? Explain briggy "tons 1 Wass the valuation rues on de 3 cqumerate the deductions from, mtd Proper 4 Faplan the treatment of donatign SB 5. pagcuss the requisite of deductipiie£Mmon ‘ Lee the requisite of deduct OF doy betes 7, BS" obligations on the property "Y Of the fay, ™Ption, follow Donation to the govern meg nated ing: ‘ tion to Non-profit j ¢. Donal PI St institutions/orpay izations or False 1 ne donor's tax rate to relatives isap goth the progressive donor's tax ang Droporcon ae tare increasing amount of tax when the net tarable gy rt res independent a PPrasal ue of the share at the date, tothe progre ssive don }ot be subject to es eee value. ‘The gift of listed shares is the fair vah Corporate donors cannot be subject = Donation to corporate donees cann tax * es the progressive donor's 4. The gift to non-residents is exempt from donor's tax, 4. Thegifts made to residents are always subjects dono’ tax 10, Donations to donees abroad are always considered made tostran 11 The donation to any person who may quaify to inhent ones ce isa donation to relatives. 12, The donation to non-resident donees is subject to proportional tax whereas the donation to resident donees is subject to progressive tax. 13, The registration of a property in the name of another person is a taxable donation. 14. The cancellation of the indebtedness of another for @ consideration is a donation. 15. Donation in irrevocable trust is excluded in gross gift. 16. Husband and wife are considered separate taxpayers Of donation. True or False 2 t L The donation of communal or conjugal properties is Pres half by the husband and one-half by the bis med made one al donees is split into several 2 The donation of a single property t0 Se donations to each of the donees. 587 _ th —— |Chapter 17 - Donor’s Tax 3. Transfers mortis, whether inter vivos or mo: rtis causa consideration are subject to donor's tax. | for an j, ns 4. Gifts of non-listed shares are measured at their book val cheng by the Adjusted Net Asset Value Method. Me aS dete, 5. Gross git must be valued atthe point of death of the dono. "neg 6 Gross gift must be valued at the completion of a conditional 7. Gross git on revocable transfers is determined when the ¢2o%3lon accepts the property. 8. If either of the spouses did not consent to the communal property, there is only one donor for p 9. Dowry toa brother is deductible. 10. Dovry toa legitimate child by a non-resident alien donor is deg 11. Obligations assumed by the donor are deductible against pec eetstble 12, The assumption of the donee's obligation by the donor ig (Et subject to donor’s tax. 7m Of donation 13. The obligations of the donor on the property don: donee, is a diminution of the value of the gross gift. 14. Any decedent can claim deductions for transfers to the 15. Transfers to the government involving properties loc; deductible. 16. Donations to accredited non-profit institutions are gifts only by non-resident donors. 17. A dowry must always be given within one year of th marriage to be deductible. 18, Fora dowry to be deductible, tis essential thatthe recipient child must a legitimate child. S tingent dong donation . OF ac UrPOses of the done or s ated, if assumed by 4, 5 government ated abroad are non deductible from gross le celebration of Multiple Choice - Theory: Part 1 1. A gross gift is valued at the date of a. death of the donor. b. notarization of the donation. c. completion or acceptance of the donation, 4. payment of the donor's tax. 2. Adonation of real property is valued at zonal value of the property. value per tax declaration. independent appraisal value. the higher of zonal value or value per tax declaration pose 3. Which type of donation is exempt? a. Renunciation of the right to collect an indebtedness of a debtor b. General renunciation of inheritance by an heir ¢. Transfer for an insufficient consideration d. Irrevocable donation in trust 588 |+ = yest Donor's Tax nation of prefe ve oc value mh Stocks are 3 par value “alued ap Second-hand value §, independent apprast yay, purposes of donoy’s Forermined as its book value Sten, the & a. Asset appraisal methog ““™8the "vay, f Independent appraisal me, “ommon ¢. Adjusted net asset methyg. ia j._ Market rice averaping mth which is COrrect regarding don Both spouses shall file separ 0°! Comm Either spouse shall file a gon Morsay Peng, ‘The spouses shall flea congo " d. Any of these at the discretion OF the gn Star, espouses um the donation of common prope 4, one-half made by the hustany, a be considered p._ totally made by the spouse spin Oa matey ¢ void unless with the consent yt nate 4 donation made by the head ore cg ily. Donations of properties to joint donees are tr reated ; a. separate donations tobe reported ue b, donations to each donee which wil bere "sta run relation of each donee to the donr Sse acon to the c a donation to a partnership, hens ad , these ate subject 030% doors 4, a single donation which wil be reportedina single dona’ tan ren Stax return, Which of the following donations is taxable? a. Donation to an accredited charitable institution b. Donation to an association c. Donation to an educational institution accredited by CHED d. Allofthese 10. Which of the following obligations, even if assumed by the donee, s not deductible from gross gift? i a. Mortgage payable ¢.Donor'stax b. Real property tax d.Allofthese 589from ted by the donor for utilities expenses of th “restricted by the donor to be used of the non-profit institution to carry our 5 © non. Bro; TRaniza . Obligations, if assumed by the donor, are deductible by residents or citizens. deductible by non-resident aliens. _ & deductible by any donor. d. never deductible. _ Dowry exemption is not allowed for a. adopted children. “b. recognized natural children. ¢ _illegitimate children. _d. None of these ‘Statement 1: Where property is transferred during a person's lifetime for Jess than adequate and full consideration in money or money's worth, then ‘the amount by which the value of the property exceeded the value of the consideration shall, for the purpose of the donor's tax, be deemed a gift. ‘Statement 2: Encumbrance on the property donated, if assumed by the donor, is deductible for donor's tax purposes. Which is true? ‘Statement 1 c. Both statements d. Neither statement Donations abroad are exempt from donor's tax to an alien a non-resident Donations in the Philippines are exempt to 590t wt 47- Donor’s Tax al p jch is false? wi statement 1 statement 2 ich is correct regarg) 1 woniproft institutions? : no ft must be made to ac * jy must be made tg , “dinsti ow TT credited or not‘? bona git ¢ The donor must be a resid, of, E § The Property donated mush Atney gens donation. esituaeg rete Phy ter the Phi PPines, i ponations in the tax return is pre nea he cng, 3 his is true to “ented on a “ Donations to relatives only “OM ve yea Donation to strangers gnjy o-date basis . Both donations to relatives and do, {Donations made in the Phi nations ilippines only“ S¥2ngers statement 1: Donor’s tax rates va the time of gift. "Y depending onthe g statement 2: The law in force at th ti gift shall govern the contract of donation, tn or perfec . ofthe PPlcable tax law at Which is correct? a. Statement 1 ©. Both stat pb, Statement 2 ames 4. Neither statement 5, Which of these donations to the government ar h re subj ‘stax? a. Donations of tanks and ammunitions to the Philip me Donations of computers to the Department of Education b. c. Donations to government-owned and controled corporations d. None of these & Counted from the date of donation, the donor's taxis pid within a. 10 days. 30 days. b. 15 days. 4.60 days. 1. Which is not a required disclosure inthe donor’ taxretun? Current and past gifts during the year Donations made last year Name of the donee Deductions claimed 591Chapter 17 - Donor’s Tax 10. 1 12. 13. 14. 15. Which is not included in gross gift? Transfers to the government Transfers to non-profit and non-stock charitable institut Portion ofthe fair value of the property adequately paig "S Portion of the donation representing dowry for pose Which of the following is included in net gift? a. Transfers to the government Transfers to non-profit and non-stock charitable institut, c. Portion of the donation representing dowry a d. Excess of the fair value of the property over the consj the donee Aeration Paid by Which of these is reflected in net gift? a. Dowry toastep-child b. Gift toa spouse c. P100,000 gift to relatives d. Obligations assumed by the donee Under the law, the donor's tax return shall be filed in a. duplicate. c. Quadruplicate. b. triplicate. d.quintuplicate. Which is not entitled to claim tax credit for foreign donor's tax paid? a. Resident alien c. Non-resident citizen : b. Resident citizen . Non-resident alien ‘The donor's tax may be paid to the following except a. Anauthorized agent bank b. Revenue district officer c. Revenue collection officer d. Barangay treasurer If there is no BIR office in the place of the donor's residence, the donor's tax return shall be filed with the a. office of the Commissioner. b. revenue district officer. revenue collection officer. authorized municipal treasurer. Where the donor has no residence in the Philippines, the donor's tax return shall be filed with a. the office of the President. b. the office of the Commissioner. ©. an authorized government depositary bank near the residence of the donee. 592 nCef! 47- Donor’s Tax a the Revenue District donee is located, ce hay, "jut , ich of these donations. yo Mejrthe donor isa residengr ® Philp, Donation of properties) Pie poy, here the ponation of prope; poth A and B Tes located Neither A nor B *Phlbag donors eoreg ich of ise donations to th ‘xifthe donor is anon-resige® Philipp, Donation of Properties wlettalens Me Boi st Donation of properties jn...°4 abroa, Subjecy Both Aand B located in the "0 donor a Neither A nor B ich of the following proper wieo the wife? PETES, When dag a. Capital properties * STE not sy h. Paraphernal properties < Common properties a BandC nultiple Choice - Problems: Part 1 1. Mr. and Mrs. Gaspar donated a the wishes of Don Silvano, Mr. property to Mr. Gaspar as the firs Piece of land to Mt i I Lee in accord fae father, Don Silvano dina be with Mr. Lee as the ‘second donee, Which is correct? a. Only Mr. Gaspar shall file the donor's ta return b. Both Mr. Gaspar and Mrs, Gaspar shall i ¢ Thegiftis exemptfrom donorsta, myst 4. Mr. Lee shall file the donor's tax retum . Eddie donated P 100,000 to an accredited charitable institution to cover administrative expenses of the latter. Which is corec? a. Eddie shall pay P30,000 donor's tax. b. The donation is exempt because the donee isan accredited charitable institution. ceed P100,000 . because it does nat ‘ c. The donation is exempt edono’stax table. 4. The donation is subject tothe tax using th r P500,000. Out ‘of compassion to his brother obligation. James was indebted to Juan fo James, Pedro assumed and paid Jam‘ 593 emoN Chapter 17 - Donor’s Tax Which is correct? a. James shall report the P500,000 as gross income, b. James shall report the P500,000 in his donor's tax. €. Pedro shall report the P500,000 as donation and pay the q d. Both James and Pedro shall file a donor's tax return, OnOr's tay 4. In 2015, Mr. Mabait made a single donation of P 90,000 cash his half-sister. Which is correct? t Mrs, May The donation is subject to 30% tax. "ait, The donation is exempt from donor's tax. The donation is subject to progressive donor's tax, Mrs. Malait shall pay the donor's tax. aoge 5. In 2015, Mr. and Mrs. Mapagbigay made a single donation their son on account of his graduation from college. The don; from the salaries of Mr. Mapagbigay. of P200,9 ation was a Which is correct? a. The donation is exempt from donor's tax. b. The donation shall be subject to income tax. ¢. Both spouses will pay donor's tax. d._ Either of the spouses pays the donor's tax. 6. In 2015, Roy transferred P 200,000 to his younger brother, Lee stipulated that the P50,000 of the donation shall be given to Jayrick, "4 Which is true? a. The donation is exempt from donor's tax. b. The donation to Lee is subject to donor's tax, but the donation to Jayrick is exempt. c. The donation to Jayrick is exempt, but the donation to Lee is taxable. d. Both donations are subject to donor's tax. 7. Jay donated P1,000,000 to the Autism Foundation, an accredited social welfare institution. Jay stipulated that 1/4 of the donation shall be given to Cancer Survivor Society, another accredited non-profit institution. a. The entire P1M donations are exempt from donor's tax. b. The entire P1M donation shall be subject to donor's tax. c. P750,000 donation shall be subject to donor's tax. d. P250,000 donation shall be subject to donor's tax. 8. Ms. Kris gave her longtime best friend and ABS-CBN Kapamilya co-host, Mr. Abunda, a Hummer worth P14M. Which is correct? a. The donation is a donation made between strangers subject to 30% tax. b. The donation is exempt from donor's tax. €. The donation is subject to donor's tax at progressive rates. 594y 1 17- Donor’s Tax pot he donation isa rep a. tab le item realty, a VAT tax; ‘sf he fs ‘Pay ‘ ding eit The lot was ge tg yy th P1009, oe Con, fr, Abana ich is incorrect? 009 Wie transfer is subject tp the tl ‘Oh 3 he transfer is subject VAT. oat 83 0 ¢ The transfer is Subjec ‘Pita ‘Allof these tte Sonora, . Aguinal rand Mrs. Aguinaldo do, Misahter, Hanna, whois pen from a Prior marriage, ed settin, Piece of, Se Hat YO is i which is correct? Sa hid of iy *0 thee Mr. Aguinaldo shall re *Buinaldo a . ‘Port pb. Mrs. Aguinaldo shall repo Fe Bhot asp «Mr Aguinaldo shall compurey 2 Py 4, Both Mr. and Mrs, 4 lonor’s 00. exemption. ‘Bulnaldo shay mu the donor iim deductions rable Mrs. Henson donated P400,000 to hisse downy a, Henson's net gift shall be Pago ype Petter, Why p, Henson's net gift shall be 390,009 Subject to prograt correct? ¢, Henson's net gift shall be P490999 suo" progestin ,_ Henson's net gift shall be P3999 aed id 0% dono’ ax After receiving P300,000 repayments creditor cancelled the balance of hisasi 5040 Pomisory ce the tor sister-in-law, What isthe correct presentation ofthe foreuing nth don't return? Relatives Stranger a P 0 P 200,000 b. P 200,000 Po “ P 300,000 P 0 fy Pp 0 Poo . Miss Gelen wanted to help her brother who is financially challenged. She donated an agricultural land worth P1,000,000 and designated her brother and sister-in-law as donees. 595 llSS ‘Porting of the Aonation M the Chapter 17 - Donor’s Tax Which of the following properly depicts the re donor's tax return? ‘Relatives Strangers /- P1,000,000 P 0 b. P 500,000 P 0 ce P 500,000 P 500,000 ad P 0 P 0 14, Mr. and Mrs. Teban donated a commercial lot as dowry to th The commercial lot is a conjugal property valuing P800,000 <”,“2Uthtey donation. the date of Which of the following properly depicts the presentatioy mn of thi the donor's tax return of Mr. Teban? © donation in Relative Stranger a P 800,000 Pp 0 b. P 400,000 Pp 0 c P 400,000 P 400,000 a P 120,000 PO 15. Don Nicodemo donated an agricultural land to his granddau, ighters, Mara and Clara. The property was worth P1,000,000 at the date of donation, Which of these is the correct presentation of the donation in the donor's tax return? Relatives Strangers a P 1,000,000 P 0 b P 500,000 P 0 c P 500,000 P. 500,000 a. P 0 P 0 16. Mr. and Mrs. Manolo donated a property which Mr. Manolo inherited during the marriage. Which is incorrect? a. There is only one donor in the donation. b. Mr. Manolo shall file a donor's tax return. ¢. Mrs. Manolo shall not file a donor's tax return. d. Both spouses shall file separate donor's tax returns. 5967 — Donor’s Ta; ert x na? and Mrs. Miran, 17- sunich is correct? Thay Me Mie Ror ing ay B omly Mrs. Miranda‘ aired eaten “sot Ch , ed to fle. 4, Both spouses shalt fie cone! to nite randy dong org i, Sta rapt tary oh 48 donated is . yotole choice - Problems: Par.» r. Alfonso donated a brewe inebra assumed the mor. Y With Grount to include in nee TuaeE on th rea, . P pi ‘ any, Vali mete Gin, LP 18M : von "BP Me e vagaling COmPany donated a Mmer company. The lot was encyye™*Cil oy assumed by Magaling The prog’ are? 1000000 Bo, nen Beating ase Tee Pg » PL0OG, ,e ed : P-900,000 ©P600,099 Property tay 4 P500099 anderson donated a lot to the Pip, i value of P4,000,000 and was encuntern mite The it is the net taxable gift on the q °¥@PI,000,099 fie a we "ee What fe lonation? a © P 3,000.00 b. P 1,000,000 4.P4o00na9 4, On uly 1, 2016, Mr. Carrion donated 100,000 to hs son asd 8 dovry for his upcoming marriage. He also gae daatter who got married last en me dowry of FLO to hi What is correct? a. Mr. Carrion shall reporta P9000 net git b. Mr. Carrion shall reporta P180,000 net it. ¢. Mr. Carion shall report a P190000 nett. d. Both donations are exempt. Henrie donated 20,000 common stocks of Quickie Birds Corporation. tthe date of donation, Quickie Birds Corporation had the folowing: P 2,000,000 Net assets Peron Outstanding common stocks 597 a!SS Per financial statements disclosures, Quickie had certain as. value exceeding their book values by a total of P1,200,000, -* “ith fy, Chapter 17 - Donor’s Tax Compute the amount to be reported in gross gift. a P 200,000 c.P 400,000 b. P540,000 d. P 640,000 6. Bruno had 12,000 in the stocks of Jonas Corporation. The financial statement of Jonas nearest the date of donation +, following: Publish eVeals the Total assets at fair value P 2,000,000 Total assets at historical cost 1,500,000 Total liabilities 800,000 Outstanding common stocks 100,000 The donation shall be valued at a. P60,000 c. P 144,000 b. P 84,000 d. P 180,000 7. Mr.and Mrs. Julio transferred the following properties in 2016: * —P400,000 cash to daughter, Jane, as a graduation gift ‘* P600,000 land to son, Eugene, who is scheduled to wed next year © P300,000 car to Horace, Mr. Julio's best friend, as a wedding gift What is the respective net gift of Mr. and Mrs. Julio to relatives? a. P 1,000,000; PO b. P-500,000; P500,000 c. P-480,000; P480,000 d. P-490,000; P490,000 8. Whatis the respective net gift of Mr. and Mrs. Julio to strangers? P 300,000; PO PO; P300,000 P 150,000; P150,000 P 140,000; P140,000 poo 9. Shanon donated a property valued at P500,000 to his half-sister who is getting married. Shanon designated the donation to the new spouses. The property has P 100,000 mortgage which the donees agreed to assume What is the respective net gift to a strangers and a relative? a P0;P 400,000 c. P 200,000; P200,000 b. PO; P390,000 d. P 200,000; P190,000 598pote" 47 - Donor’s Tax and Mrs. Crockie do, s0-¥7'900,000 to Rey, their co mt pi and coml a b. G a y.come a yp. andl ‘ one Mrs. Crockie designated pee chi ‘ate itay Dery gy ent ute the Fespective net gig, TY to en al 490,000; P 500,009 _ 490,000; P490,009 990,000; P 990,009 P 1,000,000; P1,000,099 tM, andy, Rey ts.¢ "Vand y, "Otkie to ute the respective net Rifts oth, po;P0 ang p 490,000; P490,000 MS. Cro “a 500,000; P500,000 aan, 1,000,000; P1,000,009 ro donated the following pro P 2,000,000 car on November? org P 3,000,000 agricultu tohis aot on jena married 2014 P 4,000,000 building on Fe Sho pting he tas pig erties: married Bray 1,204 to ig P_ 5,000,000 cash on july 1 administrative expenses ofa P 1,000,000 cash on August 1, 2014 tes laritable instuton ee ai 2015 tohis mother in law Compute the total taxable donation in 2014, a b P15,000,000 ¢.P 11,990,009 P12,000,000 4.P7,000,000 43. During the celebration of his second marriage on February 14, made a donation of PS00,000 to his daughter to peelru nen terms with his new wife. Compute Mark's net taxable gift. a. b. P-500,000 c.P250,000 P 490,000 4. P240,000 Multiple Choice - Problems: Part 3 1 Antonio had a net gift of P150,000 to his first cot tax? a b. usin, What is the donor's }0 P 1,000 « paz0 P 3,000 a. P45000 599 elSS 2. Jose donated a lot worth P400,000 to his second Cousin subj condition that his cousin assume the P 40,000 accrued real protl®* to a the lot. What is the donor's tax? oPerty tayo a. P 10,000 c.P 108,000 n b. P8400 d.P 120,000 Chapter 17 - Donor’s Tax 3. Adonor made the following donations din 2016: Net gift to strangers P 40,000 Net gift to relatives ——100,000 Total net gift P_140,000 Compute the total donor's tax due, a PO c.P 12,000 b. P800 d.P 42,000 4. In 2014, Andy made a total donation of P350,000, inclusive of P80 donations to strangers. Compute the total donor's tax due. 800 a P4800 c. P 28,800 b. P24,000 d.P 32,000 5. Derrick made the following donations in 2016: January 5, 2016 - cash, to sister P 250,000 August 17, 2016 - Iphone 6, to girlfriend 150,000 November 8, 2016 - Stocks, to granddaughter 400,000 Derrick’s donation to the granddaughter is made on account of the latter's marriage. Compute the gift tax on the January 5 donation. a. P2,000 c. P45,000 b. P4,000 4.P75,000 6. Compute the gift tax on the August 17 donation. a. P6,000 ©. P-45,000 b. P 10,000 d.P 116,000 7. Compute the gift tax on the November 8 donation. a P19,000 cP 28,000 b. P.22,000 d.P 32,000 8. Mr. Kim Chi, a non-resident Korean donor, donated a car in the Philippines worth P500,000 to his resident Filipino best friend. Mr. Chi paid P50,000 donor’s tax abroad. 600 a-Donor’s T; is the donor's tax g wh 150,000 “ean Pavabie 3p 400,000 CP Tyee ing, p P pg "00 Phe ur Kinot0, a NOn-residen i P800,000 to a nr Panes J, regia? dor $70,000 opons ania Fapan yt viet any, PhO te lng “ 7720.00 CPregg, tet tan 4 dpg aa al e -resident citizen mag, Ae the oy 0 July 1, 2015 ~ P 209,999 "lowing g 000, lo * 30,000 donor's tax abroa Ae a Pont Ina, August 28, 2015 ~ p 319 Fen, married Inthe Philippngs "doy : i nag ghey ; ‘ ho ig at is the donor's tax ty be pap Betti ve st donation? Paid res = 30,000; P6,000 Pop, yg bp PO;PO ap 0 ay is the required donor's s1, What fs tax due return? and payable in term a PO P1409 oat b. P3,600 4. P 45,000 2, Aresident alien made the following donations dy 7 ring the year to relatives: Netgift in the Philippines (paid 24.09 don : Net gift abroad (paid P18,000 donor's tay ta P 700000 Total net gift TT What is the donor's tax due and payable a P44,000 ©. P6800 b. P26,000 a.Po 18, Manso, resident citizen, donated several properties during he year Net gift in the Philippines Po Net gift made abroad 500.000 Total global net gift 500,000 Pp 10000 Gifttax paid abroad= What is the donor’s tax due and payable in the Phili a PO ¢.P- 10,000 b, P4,000 d.P 14,000 Chapter 17 — Donor’s Tax lippines? 14, Armando made the following donations to relatives on December 31, 2015, —Netgift_ _ Tax paid Finland P 2,000,000 P 110,000 Norway 1,500,000 120,000 Philippines 500,000 There are no other donations during the year, Compute the donor's tax due and payable, a. P304,000 c. P74,000 b. P80,000 d.P 38,000 15. The following relate toa non-resident citizen donor: Japan ~ relatives Malaysia ~ stranger Philippines- relatives if ax'ban P 2,000,000 p 60,000 1,500,000 200,000 500,000 - The donor paid P3: 54,000 donor's tax during the year, Compute the donor's tax due and Payable at year-end, a PO ©. P 64,000 b. P60,000 4.P-78,250 602