ELJ MEMORIAL COLLEGE Brgy Singalat, Palayan City Notes in Taxation Review
DONOR’S TAX Instructor:
ARENAS, LEONARD A.
[email protected] MW! ":00#2:00 PM
$. DONOR’S TAX is a ta% le&ied, assessed, collected and 'aid u'on the trans(er )y any 'erson, resident or non resident, o( the 'ro'erty )y gi*. ". Transfer subject to tax. + the ta% shall a''ly hether the trans(er is in trust or otherise, hether the gi* is direct or indirect and hether the 'ro'erty is real or 'ersonal, tangi)le or intangi)le. 2. Nature. +the trans(er includes not only the trans(er o( onershi' in the (ullest sense )ut also the trans(er o( any right or interest in 'ro'erty, )ut less than -tle. 3. Purp Purpos ose e of of gi gi tax: tax: a. o 're&en 're&entt a&oidan a&oidance ce o( estat estate e ta% ta% ). o com'ensate com'ensate (or loss o( income income ta% hen hen large large estates estates are s'lit )y dona-on. dona-on. B. FORMALITIES OF A DONATION ". Movable property / the dona-on dona-on may )e made orally or in ri-ng. oe&er oe&er,, i( the &alue o( the exceeds ds 5,000, 5,000, the dona'erson 'ersonal al 'ro'e 'ro'erty rty donat donated ed excee dona-on on and the the acce' acce'ta tance nce shall shall )e made made in ri-ng ri-ng.. 1therise, the dona-on shall )e &oid. 2. Immovable Immovable propert property y – o )e &alid it must )e made in 'u)lic document, s'eci(ying therein the 'ro'erty donated and the &alue o( the charges hich the donee must sa-s(y. C. REQUISITES OF A VALID DONATION ( C I D A ) ". CAPACITY o( the donor at the -me o( dona-on 2. INTENT to donate in cases o( direct gi*s . DELIVERY , hether actual or construc-&e. ACCEPTANCE o( the gi* )y the donee. 3. ACCEPTANCE 4. DEDUCTIONS FROM GROSS GIFT ". Mortgage on the 'ro'erty assumed )y the donee. 2. $mount s'eci5cally 'ro&ided )y the donor as diminu-on on the 'ro'erty donated. 6. EXEMPTIONS FROM GROSS GIFT ". 0,000! d"#$%es "$ &%'s de* a. on account o( marriage ). )e(ore the cele)ra-on or ithin one year therea*er c. the donee must )e legi-mate, recogni7ed natural, or legally ado'ted child o( the donor. 8otes: a. If te property property !onat !onate! e! is conjugal" conjugal"comm community unity proper property# ty# each s'ouse is a donor and en-tled to this e%em'-on. b. If te proper property ty !onate !onate! ! is exclusiv exclusive e propert property y of te !onor !onor – only the 'ro'erty oner is the donor. 2. GIFTS de +" "$ "$ +-e .se " N/"1 G"2e$e+, agencies and instrumentali-es instrumentali-es hich is i s not conducted (or 'ro5t, or to any 'oli-cal su)di&ision . GIFTS % 2"$ " "34$"+ educa-onal, charita)le, religious, cultural or social el(are ins-tu-on, accredited non go&ernment organi7a-on, organi7a-on, 'hilantro'hic 'hilantro'hic organi7a-on or research ins-tu-on. Pro&ided,
hoe&er, that "+ "$e +- 60 7 o( said gi*s shall )e used )y such donee (or administra-on 'ur'oses. . EXEMPTIONS UNDER SPECIAL LA8S 3 4ona-ons to the (olloing are e%em't under s'ecial las: ". Interna-onal 9ice 9esearch Ins-tute I99I; 2. 9amon Magsaysay $ard (ounda-on . Phili''ine In&estor
. Phili''ine#$merican Cultural ounda-on ?. Phili''ine ealth Insurance Cor'ora-on . DONATION TO A STRANGER / the ta% is 0 A o( net gi*. $ s+$&e$ is a 'erson ho is not a )rother!sister hether o( the hole or hal( )lood;, s'ouse, ancestor, lineal descendant, or a collateral )lood rela-&e ithin the 3 th degree o( rela-onshi'. . RENUNCIATION OF IN9ERITANCE $ $e.c%/" " %-e$%+ce in (a&or o( a co#heir is NOT a dona-on (or 'ur'oses o( ta%a-on. oe&er, i( the renuncia-on is made in (a&or o( another 'erson, not a co#heir, there is a dona-on. I. DONATION OF PRI:ES ; A8ARDS TO AT9LETES 3 they are e%em't (rom donor. to seGle (amily dis'utes ?. to relie&e the ta%'ayer o( the )urden o( management. H. ADMINISTRATIVE PROVISIONS ". -me (or 5ling 2. -me (or 'ayment
669CIS6S: 41819S
/ ithin 0 days a*er the gi* is made # at the -me o( 5ling the return
". $s a rule, a dona-on inter &i&os )eteen hus)and and i(e during the marriage is &oid. 2. donor
. gi*s o( conEugal 'ro'erty made )y )oth s'ouses shall )e considered as ha&ing )een made one hal( )y the hus)and and the other hal( )y the i(e and is ta%a)le one hal( to each donor s'ouse. 3. donor to a legi-mate child on account o( marriage ill not )e reKuired to 'ay the donor. dona-on to a legally ado'ted child, ho is a son o( a 5rst cousin o( the donor is a dona-on to a stranger ?. a dona-on hich as made in "L= )ut the donor shall )e go&erned )y the donor. . contri)u-ons to 'oli-cal 'ar-es or candidates in a local and!or na-onal elec-ons are generally e%em't (rom donor. s'liOng o( gi* is ta% e&asion "?. dona-on to os'icio de san ose is su)Eect to ta%. ". a man ho donates a house and lot to his 5ance is ta%a)le at 0A o( net gi*. "L. a man ho donates a )rand ne car to his 'aramour is generally lia)le to 'ay donor.(alse ?. (alse . (alse L. (alse "0.t "". (alse "2. (alse ". (alse "3.t "=. (alse ">. (alse "?. (alse ".t "L. (alse 20. (alse
$. C18C6P 1 418$I18 $84 41819. Madela ent to Bers 9esort and as gi&en a 'ri7e o( =0,000 )y the resort (or )eing its 200th guest. Is the 'ri7e su)Eect to donor
d. a 'arcel o( land orth =00,000 in a 'ri&ate document "0. hich o( the (olloing cons-tutes a ta%a)le gi* a. creditor dona-ng his car orth =0,000. he leGer as recei&ed )y the laGer on an ?, 200? ho acce'ted the dona-on. he leGer o( acce'tance as recei&ed only )y arren on anuary "=, 200?. he donor, $ made a gi* o( 200,000 to his daughter on account o( her marriage cele)rated May ", 200=. c. Mr. ramos, a mul-#millionaire, gi&es his i(e a diamond ring orth "20,000 as a )irthday gi*. d. $ and B are the only heirs o( C. $ renounces his share o( inheritance in (a&or o( B. "=. one o( the (olloing is su)Eect to donor. a ta% minimi7a-on hich is done )y s'reading the gi* o&er numerous calendar years to a&ail o( loer ta% lia)ility a. s'read#out method ). s'liOng o( gi* c. dona-on o( li(e insurance d. &oid dona-on "?. statement ": When the donee is e%em't (rom income ta%, the dona-on made )y a ta%a)le indi&idual is also ta% e%em't Statement 2: 'roceeds o( li(e insurance 'olicy on the li(e o( the decedent here the designa-on o( the )ene5ciary is irre&oca)le is alays su)Eect to donor
d. rue, true ". statement ": the agreement )eteen the donor and the donee that the laGer shall assume the ta% )urden is )inding on the go&ernment Statement 2: there is no donor
B. C1MPJ$I18 1 41819
2=,000 20,000 =0,000 "00,000
he donor0,000 hich as 'aid )y the donor at the -me o( the dona-on. ). altura reKuested Busina to 'ay $ltura. all o( the (olloing e%ce't one, are e%em't (rom donor
). dona-on to the de&elo'ment academy o( the Phili''ines c. dona-on directly gi&en to the &ic-ms o( the eru'-on o( Mt. Mayon d. dona-on to the city o( da&ao (or 'u)lic 'ur'ose 2?. there is reci'rocity, hen the donor and the donated 'ro'erty
$ B C d
4onor 8on resident alien 8on resident ci-7en 8on resident alien 9esident alien
Pro'erty Intangi)les Immo&a)le angi)le 'ersonal $ny Dind o( 'ro'erty
2#0 2. annie donated the (olloing 'ro'er-es: Hand in Hos $ngeles, Cali(ornia, JS$ Hand and )uilding in olo, Sulu Car registered in the state o( Cali(ornia, JS$ eelries in the Phili''ines Shares o( stocD in a cor'ora-on )ased in JS$ $ccounts 9ecei&a)le, de)tor is in the Phils
2=0,000 "?=,000 22=,000 3=,000 >0,000 2=,000
I( annie is a resident ci-7en, the gross gi* is a. ?0,000 ). 2L=,000 c. 23=,000 d. 220,000 2L. the gross gi* o( anniei( she is a non resident alien ithout reci'rocity a. ?0,000 ). 2L=,000 c. 23=,000 d. 220,000 0. the gross gi* i( annie is a nonresident alien ith reci'rocity is a. ?0,000 ). 2L=,000 c. 23=,000 d. 220,000 ". )utch made a dona-on to his children in 200?. In hich o( the (olloing successi&e dona-ons ill Butch 'ay donor: $mount donee
"2=,000 200,000 Q
Baron Caricot 4aDila
or gradua-on cum laude in la consolacion college o( )acolod city 1n account o( marriage cele)rated a'ril 0, 200= or 'lacing rd in the May, 200> CP$ Board e%am
I( the donor
2=0,000 3L0,000 =00,000 Cannot )e determined
=. a stranger in donor. sayers, single, ga&e an outright gi* o( "=0,000 to a (riend, ohnson, ho needed the money to 'ay medical e%'enses a. the dona-on is not ta%a)le )ecause the gi* is outright ). the donor00 c. "0L,200 d. 2??,200 30#3" 4imagan-, single, donated the (olloing 'ro'er-es on Se'tem)er 2",200? Talue Pro'erty 4onee "00,000 Cash 4ilan, )rother, on account o( marriage 200,000 eelries re%y, girl(riend residing in a'an
",=00,000 20,000 ?=,000 00,000 =0,000 "00,000 ?0,000
ouse and lot Cash Hot Car Cash Cash motorcycle
Parents, sil&er edding anni&ersary gi* PICP$ Brgy Santolan, (or use as site o( )arangay hall Pi'oy, )rother, dona-on is re&oca)le Interna-onal rice research ins-tute Magilas, (ather o( the (ather o( his mother 8ico, niece, dona-on is en-tled in the ill
30. the donor>,000 3". the donor>,000 ). "00,000 c. ">>,000 d. "=?,200 32.#3= S'ouses Santos ga&e the (olloing dona-ons
3!">!200? ""!2!200? "!"=!200
o ado, )rother o( Mr. Santos, on account o( marriage, cash orth 00,000 $ddi-onal dona-on to ado, 200,000 Pro'erty orth 300,000 to Hala, daughter
32. the gi* ta% due on Mr. Santos on $'ril ">, 200? a. >,000 ). 00 c. ",000 d. e%em't 3. the donor.#3 3>. right, an $merican ci-7en residing in 8e RorD, JS$ donated the (olloing 'ro'er-es anuary " e)ruary 20
o mang cano, his ili'ino (riend in ne RorD city 'ro'erty situated in the Phili''ines orth 0,000 o his legi-mate daughter, Sina, a resident o( the Phili''ines, on account o( her marriage to a ili'ino )oy(riend, a resthouse in Kue7on Pro&ince &alued at ", >00,000 )ut ith a cost o( ",200,000
$ugust =
o his )rother, 4iony, a naturali7ed ili'ino ci-7en, residing in Ilo Ilo City, car orth >00,000
1n the anuary " dona-on a. 8o ta% is to )e 'aid )ecause the donor is a non resident alien ). 8o ta% lia)ility )ecause the dona-on is 0,000 and under the donor
=00,000 =00,000
he donor
"3,000 33,000 "=0,000 00,000
=0#= =0. Cosa, idoer, ga&e the (olloing dona-ons during the year March 3 $'ril 3 May 3
o his daughter, dona, on account o( marriage to )e cele)rated in 5&e months, 200,000 o his housemaid, etang, on account o( marriage to his dri&er, )u)oy, 2=,000 o his son, ege, (or 'assing the CP$ e%am, "20,000
o ugs, (or inning gold medal in )illiard in the $sian ames held in Busan, south Dorea, =0,000 une 3 o his )odyguard,ayden, on account o( marriage to his 'ri&ate secretary, 0,000 he donor00 =2. the donor00 ). >,300 c. 300 d. 3,>00
=. the donor, otel, ga&e a cash o( 0,000 as a )irthday gi* to his son, ohn. 1tel has not gi&en any other gi*s or dona-on in 200> )ut made a dona-on to his daughter in the same amount in 200?. Based on the a)o&e in(orma-on in 200>, 1tel is a. lia)le to 'ay donor. the (olloing dona-ons ere gi&en )y Patricia, a resident alien, on e) " o( the current year: o the Phili''ine go&ernment o his son as a edding gi* held 2 months ago Birthday gi* to a (riend Wedding gi* to his (riend
=00,000 200,000 =0,000 20,000
he aggregate donor,300 d. 3?,000 =?. the rule on trans(er (or inadeKuate considera-on does not a''ly to a. Eeelry (or 'ersonal use ). deli&ery trucD c. &acant lot d. a'artment house =. a)arca sold his car to his (riend Bengala (or "00,000 hen its &alue as 2=0,000. he 'ro'erty as acKuired )y $)arca (or 3=0,000 in 2003. S i% months a*er the sale, $)arca died. 1n that date, the 'ro'erty as &alued at "L0,000. he donor
). ?2,000 c. 8one d. ,000 >0. hen a 'ro'erty is donated, the )asis o( the 4onor ". statement ": $ donated real 'ro'erty cannot )e registered in the name o( the donee unless the donor
rue, (alse alse, true rue, true alse, (alse
>2. statement ": only one 'erson shall )e 5led (or se&eral gi*s dona-ons; )y a donor to the diUerent donees on the same date Statement 2: i( the dona-on in&ol&es conEugal!community 'ro'erty, each s'ouse shall 5le se'arate return corres'onding to his!her res'ec-&e share in the conEugal!community 'ro'erty. a. ). c. d.
rue,(alse alse, true rue,true alse,(alse
>. during the year, Mr. and Mrs. Cru7 donated "00,000 in cash (rom their conEugal assets to eac h o( their three children. or 'ur'oses o( 'aying donor3. donor months a*er the gi* (rom the date o( gi* c. 2= days a*er gi&ing the gi* d. 0 days a*er the end o( e&ery Kuarter. >=. statement ": i( on any one date, t here is a dona-on )y one donor to his rela-&e and another one to a stranger, there ill )e to se'arate donor
rue, (alse alse, true rue, true alse, (alse
>>. one o( the (olloing is not an aGachment to the donor ?. Manolo, a resident o( Ca)anatuan city donated to $rtur a 'ro'erty in Baguio City. he donor
a. Ca)anatuan City ). Baguio City c. Palayan city d. anyhere in the Phili''ines >. in num)er >?, assuming the donorL. Caring, ili'ino, had the (olloing data: 8et gi* Phili''ines "=0,000 8et gi*, JS 3=0,000 i* ta% 'aid in JS ?,=00 he donor o( the current year "?=,000 22=,000 =0,000
o his sister, 4iana, 'ro'erty situated in Cali(ornia, JS$. he donor
he donorL,000 ). 0," c. 3L,000 d. 8o ta% credit alloed