Exercises – Donor’s Tax
1. The common characteristics of transfer taxes is that the transfer of property:
a. Is onerous.
b. Takes effect during the lifetime of the transferor.
c. takes effect upon the death of the transferor
d. Is gratuitous
2. A tax imposed on the gratuitous transfer of property between two or more persons who are living
at
the time the transfer is made
a. estate tax
c. income tax
b. donor’s tax
d. transfer tax
3. One of the following is not a distinction between donation inter vivos and donation mortis causa.
a. Donation inter vivos takes effect during the lifetime of the grantor while donation mortis
causa takes effect after the death of the grantor.
b. Donation inter vivos is subject to donor’s tax while donation mortis causa is subject to
estate tax.
c. Donation inter vivos requires a public document while donation mortis causa may not
require a public document.
d. Donation inter vivos is valued at fair market value at the time the property is given while
donation mortis causa is valued at fair market value at the time of the death of the grantor.
4. Donor’s tax is:
a. A property tax
b. A personal tax
c. A business tax
d. An excise tax
5. An act of liberality whereby one disposes gratuitously a thing or right in favor of another who
accepts it
a. succession
c. donation
b. occupation
d. tradition
6. The following are the requisites of a donation for purposes of the donor’s tax, except one.
a. Capacity of the donor
b. Capacity of the donee
c. Delivery of the subject matter or gift
d. Donative intent
7. Which of the following is subject to donor’s tax?
a. Those made between persons who were guilty of adultery or concubinage at the time the
donation.
b. Those made to conceived and unborn children.
c. Those made to a public officer by reason of his office
d. Those made between husband and wife during their marriage.
8. Which of the following donations inter vivo may not require that it be in writing?
a. Donation of personal (movable) property, the value of which exceeds P5,000.
b. Donation of personal (movable) property, the value of which is P5,000.
c. Donation of real (immovable) property, the value of which less than P5,000
d. Donation of real (immovable) property, the value of which exceeds P5,000
9. For the donation to be considered valid, acceptance of the donation must be made:
a. During the lifetime of the donor only
b. During the lifetime of the donee only
c. During the lifetime of the donor and the donee.
d. None of the choices.
10. When is the donation perfected?
a. the moment the donor knows of the acceptance by the donee.
b. the moment the thing donated is delivered either actually or constructively, to the
done.
c. Upon payment of the donor’s tax
d. Upon execution of the deed of donation.
11. A non-resident citizen donor is taxed on his donation of properties:
a. Situated in the Philippines only.
b. Wherever situated
c. Situated outside the Philippines only
d. Situated in the Philippines only subject to the rule of reciprocity.
12. Which of the following is taxable only with respect to properties donated within the Philippines?
a. Resident citizen
b. Non-resident citizen
c. Resident alien
d. Non-resident alien
13. If a donor is a non-resident alien and the rule of reciprocity applies, which of the following
properties will not form part of his gross gift?
a. Real properties in the Philippines
b. Tangible personal properties within the Philippines
c. Intangible personal properties within the Philippines
d. All of the choices.
14. There is reciprocity, when the donor and the donated property is:
Donor
Property
a.
b.
c.
d.
Non-resident alien
Non-resident citizen
Non-resident alien
Resident alien
Intangible Personal Property
Immovable Property
Tangible Personal Property
Any kind of property
15. X, a multinational corporation not doing business in the Philippines, donated 100 shares of stock
of said corporation to Mr. “Y”, a Filipino citizen. What is the tax liability, if any “X” corporation?
a.
b.
c.
d.
•
The donation is not subject to donor’s tax.
The donation is subject to 6% donor’s tax based on net gift.
The donation is subject to graduated rates based on net gift.
The donation is subject to 6% donor’s tax based on gross gift.
X Corporation is considered as non – resident foreign corporation;
16. First Statement: Donor’s tax shall be levied, assessed, collected and paid upon the transfer of
property by any person, resident or non-resident, as a gift.
Second Statement: The Donor’s tax shall apply whether the transfer is in trust or otherwise,
whether the gift is direct or indirect, and whether the property is real or personal, tangible or
intangible.
a. True, True
c. True, False
b. False, False
d. False, True
17. When an indebtedness is cancelled without any service rendered by the debtor in favor of the
creditor, the forgiveness of debt will result to:
a. taxable income
b. distribution of dividend
c. taxable donation
d. taxable estate
18. If an individual performs services for a creditor who in consideration thereof cancels the debt,
the cancellation of indebtedness may amount to a
a. Gift
b. Capital Contribution
c. Donation inter vivos
d. Payment of income
19. Which of the following renunciations shall not be subject to donor’s tax?
a. Renunciation by the surviving spouse of his/her share in the conjugal partnership or
absolute community after the dissolution of the marriage in favor of the heirs of the deceased
spouse or any other person/s.
b. General renunciation by an heir, including the surviving spouse, of his/her share in the
hereditary estate left by the decedent.
c. Renunciation by an heir, including the surviving spouse, of his/her share in the hereditary
estate left by the decedent categorically in favor of identified heir/s to the exclusion or
disadvantage of the other co-heirs.
d. none of the choices.
20. Which of the following events is not subject to donor’s tax?
a. A Filipino citizen donated a parcel of land located in the United States to B, non-resident
alien.
b. A resident alien made a gift of P300,000 to his daughter on account of marriage.
c. A non-resident citizen gives his girlfriend a diamond ring worth P300,000 as a birthday gift.
d. A and B are only heirs of C. A renounces his share of inheritance in favor of B.
21. A gift that is incomplete because of reserved powers, becomes complete when:
I. The donor renounces the power
II. The right of the donor to exercise the reserved power ceases because of the happening
of some event or contingency or the fulfilment of some condition, other than because of the
donor’s death.
a. I and II are correct
c. Only I is correct
b. I and II are not correct
d. Only II is correct
22. Jay sold his car to Jana for P200,000. Jay’s Car cost P500,000, and had a fair market value of
P500,000 at the time of sale. What is the tax consequence of the sale?
a. There is a Taxable gift of P500,000
b. There is a taxable gift of P300,000
c. The transfer is for insufficient consideration, hence, not subject to donor’s tax
d. The transfer involved a personal property, hence, not subject to donor’s tax
23. Cito Yu has a building located in Shorthorn, Quezon City currently leased to various tenants. Since
he Is old already and wants to retire from active business, he sold the same to Janjan, his son, for 20
Million pesos. The value of the building at the time of sale is 40 million pesos. Which of the following
statement is correct?
a. The sale is for sufficient consideration
b. The sale is for insufficient consideration subject to donor’s tax.
c. The sale is for insufficient consideration but exempt from donor’s tax since the object is a
real property.
d. The sale is subject to capital gains tax and donor’s tax.
24. A, an individual, sold to B (brother in law) his residential lot with a market value of P1,000,000
for P6,000,000. A’s cost in the lot is P100,000.00 B is financially capable of buying the lot. What tax
should be imposed and collected from A as a result of the transaction?
a. Capital gains tax
b. Donor’s tax
c. Real property tax
d. Capital gains tax and Donor’s Tax
25. Every donation or grant of gratuitous advantage, direct and indirect, between the spouses
during the marriage, shall be void, except:
a. Moderate gift which the spouses may give each other on the occasion of any family
rejoicing
b. Donation mortis causa
c. Donation proter nuptias which are given before the marriage
d. All the choices are correct exceptions.
26. Neither spouse may donate any common property without the consent of the other however,
either spouse may, without the consent of the other, make moderate donations from the community
property.
I. For charity
II. On occasions of family rejoicing or family distress.
a.
b.
c.
d.
Neither I or II is a correct exception
Both I and II are correct exceptions
Only I is a correct exception
Only II is a correct exception
27. If the gift is made in properties, it shall be appraised at its:
a. Fair market value as of the time the donor’s tax return is filed
b. Fair market value as of the time of donation.
c. Historical cost at the time the donated property was acquired
d. Value in the hands of the donor
Next three (3) questions are based on the following data:
Rody, a resident citizen made the following donations:
a.
b.
c.
d.
e.
f.
g.
To Mar, a land worth P450,000 in Manila
To Leni, Jewelry worth P100,000 in Japan
To Miriam, PLDT shares amounting to P150,000
To Jojo, a building in Italy P1,600,000 mortgaged for P50,000 assumed by the donee.
To Allan, land in Davao worth P300,000
To A. Trillanes, P300,000 cash, PNB New York
P200,000 receivable to Joy, 50% condoned by Rody
Rody also transferred the following properties:
Selling Price
Car, Makati
P200,000
Car, Malaysia
300,000
Rest House, Tagaytay
1,000,000
Rest House, Malaysia
1,500,000
FMV
P300,000
200,000
2,000,000
2,500,000
28. How much is the gross gift?
a. P5,200,000
c. P4,100,000
b. P4,200,000
d. P3,200,000
Solution:
Land in Manila
Jewelry
PLDT shares
Building
Land in Davao
Cash
Receivables
Car, insufficient
Rest house, Malaysia
Total gross gifts
450,000
100,000
150,000
1,600,000
300,000
300,000
100,000
100,000
1,000,000
4,100,000
29. If he is a non-resident Alien, his gross gift is:
a. P3,200,000
c. P1,100,000
b. P1,200,000
d. P850,000
Solution:
Land in Manila
PLDT shares
Land in Davao
Receivable
Car Makati
Total
450,000
150,000
300,000
100,000
100,000
1,100,000
30. If he is a non-resident alien, and there is reciprocity law, his gross gift is:
a. P850,000
c. P1,050,000
b. P950,000
d. P700,000
Solution:
Land in Manila
Land in Davao
Car Makati
450,000
300,000
100,000
Total
850,000
34. Which of the following is not a deduction from the gross gifts?
a. Unpaid mortgage on the donated property assumed by the donee.
b. Unpaid real estate tax on the property donated assumed by the donee.
c. Diminution on the donated property specifically provided by the donor.
d. Unpaid donor’s tax on the donated property assumed by the donee.
35. Pedro donated a parcel of land to his son, Justine (15 years old), on account of Justine’s graduation.
Justine took possession of the property and received rentals derived from it. In 2015, an assessment
on the income derived from the property was issued against Justine. Which of the following
statements is correct?
a. The income of Justine should be included in the income tax return of Pedro if the donor’s
tax return on such property has been paid.
b. The income of Justine should be included in the income tax return of Pedro if the donor’s
tax return on such property has not been paid because it is exempt from donor’s tax.
c. Both “a” and “b”
d. Neither “a” nor “b”
36. One of the following is not an exempt gift or a deduction from the gross gift, of a non-resident
alien donor.
a. Dowries or gifts on account or marriage
b. Gift made to or for the use of the national Government or to any political subdivision
c. Gift in favor of an educational and/or charitable, religious, cultural or social welfare,
corporation, institution, accredited non-government organization, trust or philanthropic
organization or research institution or organization.
d. Encumbrance on the property donated, if assumed by the donee.
37. All of the following except one are exempt from gift tax under special laws.
a. Donation to integrated Bar of the Philippines
b. Donation to Development academy of the Philippines
c. Donation to Philippines Institute of Certified Public Accountants
d. Donation to International Rice Research Institute
38. All the following, except one, are exempt from donor’s tax
a. Donation of the Philippines National Red Cross
b. Donation of the Development Academy of the Philippines
c. Donation directly given to the victims of the Corona Virus.
d. Donation of the City of Davao for public purpose
39. A tax minimization scheme which is done by spreading the gift over numerous calendar years to
avail of lower tax liability
a. Spread out method
c. Splitting of gift
b. Donation of life insurance
d. Void donation
40. Your bachelor client, a Filipino residing Quezon City, wants to give his girlfriend a gift of P500,000.
He seeks your advice, for purposes of reducing if not eliminating the donor’s tax on the gift, on
whether it is better for him to give all of the Php500,000 on Christmas 2018 or to give Php250,000 on
Christmas 2018 and the other Php250,000 on January 1, 2019.
Which of the following will be your advice?
a.
b.
c.
d.
Split the donation to totally relieve the donor from the donor’s tax
Split the donation to reduce the donor’s tax.
Splitting the donation will not reduce the applicable donor’s tax
The gift should be made on account of their planned marriage to avail of dowry exemption.
41. Which of the following is a stranger for purposes of donor’s tax?
a. The son of the donor’s first cousin (second cousin)
b. The donor’s grandmother
c. The donor’s spouse
d. A child born out of wedlock of parents who are leally impeded to marry each other at the
time the child is being conceived.
42. Which of the following is donation to stranger for donor’s tax purposes?
a. Gift to an ancestor
b. Gift to lineal descendant
c. Donation to nephew
d. Donation to sister company
43. When the donee or beneficiary is a stranger, the tax payable by the donor shall be:
a. 30% of the gross gifts
b. 30% of the net gifts
c. 6% of the net gifts
d. 6% of the gross gifts
44. Which of the following scenarios will result to payment of donor’s tax at 6% rate?
a. Financial help given to families of SAF members who died in the Mamasapano incident
through Sagip Kapamilya Foundation
b. Motor boats given to victims of Yolanda Though the City Government of Tacloban
c. Moderate donation by a husband to his beloved wife
d. Donation made by a managing partner to a partnership which he belongs.
45. ABC Corporation donated P100,000 to the barangay for the purpose of cementing a barangay
road where its factory is located.
Statement 1: The donation is exempt from donor’s tax.
Statement 2: The corporation may claim full deduction for income tax purposes
a. Statement 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statement 1 and 2 are true
46. Which of the following if false?
a. Donor’s tax applies also to juridical persons.
b. For purposes of donor’s tax, second cousins are strangers to each other.
c. Encumbrance on the property donated, if assumed by the donor is deductible for donor’s
tax purposes.
d. As a rule, donation between husband and wife during the marriage is void.
47. Donor’s tax credit is not allowed to a donor who is a:
a. Resident citizen
b. Non-resident citizen
c. Resident Alien
d. Non-resident alien
48. The Donor’s tax return shall be filed within:
a. Six (6) months after the date the gift is made
b. Two (2) months after the date the gift is made or completed.
c. Thirty (30) days after the date the gift is made.
d. Thirty (30) days after the date the gift is made or completed
49. Statement 1: A donation can be both a part of the gross gift of the donor and taxable income to
the donee.
Statement 2: A donation may be exempt from donor’s tax but not necessarily a deduction from
the donor’s gross income.
a. Only statement 1 is true
b. Only statement 2 is true
c. Both statements are true
d. Both statements are false
50. Statement 1: Only one return shall be filed for several gifts (donations) made by a donor to
different donees on the same date.
Statement 2: If the donation involves conjugal/community property, each spouse shall file
separate return corresponding to his/her respective share in the conjugal/community property.
a. True, True
c. True, False
b. False, False
d. False, True
51. Statement 1: If on any one date, there is a donation by one donor to his relative and another
one to a stranger, there will be two (2) separate donor’s tax return to be filed.
Statement 2: In donor’s tax, no extension of time for filling the donor’s tax return is allowed.
a. Statement 1 is correct, while statement 2 is wrong
b. Statement 1 is wrong, while statement 2 is correct
c. Both statements are correct
d. Both statements are wrong
52. Manolo, a resident of Dagupan City donated to Arturo a property in Laoag City. The Donor’s tax
is P40,000. The deed of donation was signed in the residence of Arturo in Baguio City. The donor’s
tax return must be filed in
a. Dagupan City
c. Baguio City
b. Laoag City
d. Quezon City
53. The following were the donations made by husband and wife:
June 12, 2018 – P220,000 cash to a legitimate son of account of marriage two months ago.
May 4, 2018 – Second hand car worth P180,000 to wife’s mother.
How much is the total donor’s taxes paid by husband and wife on both donations?
_________________
Solution:
220,000 + 180,000 = 400,000 -250,000 = 150,000 x 6% = 9,000
54. On July 18, 2018, Mr. Dela Cruz gave a property with a fair market value of P550,000 to Lester, a
legitimate son, and Jennifer, Lester’s bride, on account of their marriage celebrated on July 19,2018
The donor’s tax payable is: _______________
Solution: 550,000 – 250,000 = 300,000 x 6% = 18,000
The next four (4) questions are based on the following data:
On February 25, 2013, Mr. and Mrs. Salomon donated their conjugal land worth P500,000 to their
three sons, on account of marriage to one of them who got married 5 months ago.
On June 09, 2013, they also donated to the child of Mrs. Salomon by first marriage, jewelry worth
P75,000 on account of marriage more than a month after the donation.
Finally, on December 25, 2013, they donated to the nephew of Mr. Salomon a building worth
P750,000, 40% of which was co-owned by their Kumpare who agreed to the donation and executed
the necessary documents donating his share.
55. The donor’s tax due on the February 25, 2013 donation for Mr. and Mrs. should be:
Solution:
Land
MR
250,000
MRS
250,000 (no tax because exempt)
56. The donor’s tax due on the June 09, 2013 donation for Mr. and Mrs. is:
Solution:
Land
Jewelry
Total gift
Exempt
Net gift
Rate
Donor’s tax
MR
250,000
37,500
287,500
250,000
37,500
6%
2,250
MRS
250,000
37,500
287,500
250,000
37,500
6%
2,250
57. The donor’s tax due on the December 25, 2013 for Mr. and Mrs are:
Solution:
Previous
Building
Total gift
Exempt
Net gift
Rate
Donor’s tax
Tax paid
Tax due
287,500
225,000
512,500
250,000
262,500
6%
15,750
2,250
13,500
287,500
225,000
512,500
250,000
262,500
6%
15,750
2,250
13,500
58. The donor’s tax due on the December 25,2013 for their Kumpare is:
750,000 x 40% = 300,000 – 250,000 = 50,000 x 6% = 3,000
The next three (3) questions are based on the following:
Mr. and Mrs. Pinagpala made the following donations during the calendar year 2014 (common
property unless otherwise stated):
Date
January 2
Donations
To Maria, legitimate daughter, on account of her forthcoming marriage, 10,000
shares which are not traded in the stock exchange. The book value at the time of
donation was P50 per share.
To Juana, family friend of couple, on account of her birthday, P20,000.
February
To Petra, Legitimate daughter, on account of her marriage on February 1, 2013
a piece of antique jewelry from the capital property of Mr. Pinagpala. The pawn value
of the jewelry was P50,000.
To Estela, legitimate daughter, on account to her graduation, a piece of land costing
P500,000. The fair market value per BIR at the time of donation was P1,000,000. Its
zonal value was P1,200,000. The piece of land had an unpaid mortgage of P100,000
which was assumed by the donee.
To Lourdes, Mrs. Pinagpala’s sister; on account of her forthcoming marriage, cash
P100,000.
October
To PRTC University, a non-profit educational institution, P250,000. To Belmont
Shipping Company, a piece of land valued at P700,000.
To Anecito, Legitimate son, on account of his forthcoming marriage, cash of P200,000.
59. How much is the tax due and payable of Mr. Pinagpala on gifts made on January 2?
a. P19,600
c. P6,600
b. P7,000
d. None of the choices
60. How much is the tax due and payable of Mr. Pinagpala on gifts made on February 4?
a. P58,400
c. P36,800
b. P51,800
d. None of the choices
61. How much is the tax due and payable of Mr. Pinagpala on gifts made on October 4?
a. P126,000
c. P111,000
b. P111,800
d. None of the choices
62. During the current year, Mr. and Mrs. Cabarles, non-resident citizens, donated the following:
Sept. 25:
To Leona, a legitimate child, on account of marriage last month, a conjugal property
located in the Philippimes, FMV, P620,000.
To Leo, nephew of Mr. Cabarles, on account of marriage, a property located in USA
exclusively owned by him with fair market value of P150,000 (gift tax in USA, P5,500)
Oct. 9:
To Leonor, a legitimate child, conjugal property in the Philippines with fair market
value of P100,000.
The gift tax payable on the Sept. 25 gifts of the husband is:
a. P8,000
c. P8,357
b. P6,500
d. P12,000
63. Using the data in the preceding number, the gift tax payable on the October 9 gift of the
husband is:
a. P14,000
c. P500
b. P1,800
d. P4,200
64. Mr. Riano made the following gifts to his relatives:
Phils.
USA
UK
Gross gift
P750,000
P500,000
P250,000
Deductions
250,000
200,000
150,000
Tax paid
25,000
12,000
Italy
P500,000
150,000
10,000
The gift tax due after tax credit is:
a. P35,600
c. P33,520
b. P25,600
d. P39,000
65. Pedro gave gifts to the following persons on his 30th Birthday:
-
A second hand car worth P350,000 to Kaskasero, his trusted driver. The donation was made
orally. Since then driver had taken possession of the property.
-
To his Mayordoma, Ms. Mercy, a lot with a bungalow thereon, the value of the property is
P1,200,000. The donation provides that it may be revoked anytime at the pleasure of mikey.
-
His flower shop worth P700,000 to Hardinero, his gardener. The donation is provided in his
will.
-
Cash of P50,000 eachto his three houseboys
How much is the donor’s tax due on the above donations?
a. P720,000
c. P100,000
b. P45,000
d. P1,000
Next two (2) questions are based on the following information:
Juan, single, donated the following properties on September 21, 2014
Value
100,000
200,000
1,500,000
75,000
300,000
Property
cash
Jewelries
House and lot
lot
car
Donee
Pedro, Brotherm on account of marriage
Nena, Girlfriend residing in Japan
parents, silver wedding anniversary gift
Bgy. Ligaya, for use as site of barangay hall
Carling, Brother, donation is revocable
50,000
100,000
70,000
cash
cash
Motorcycle
International Rice Research
Guillermi, father of the father of his mother
Karen, niece, donation is embodied in the will
66. The donor’s tax payable on the donation to strangers is
a. P103,500
c. P157,200
b. P274,500
d. P60,000
67. The total donor’s tax payable is
a. P66,000
b. P100,000
c. P160,000
d. P157,000
68. Amanda Raya sold her properties to her son on the following prices:
Residential house for P100,000
Personal properties for P50,000
The Current fair market value on the date of sale was P1,000,000 for the house, and P500,000 for
personal properties.
Assuming that you know the facts as a BIR officer the correct tax payable on the transaction is
a. P12,000
c. None
b. P72,000
d. P38,000
69. Mike is a sole proprietor engaged in the distribution of various cosmetic product. During the
year,
he sold a parcel of land valued at P2,500,000 to his long time buddy, Leomar, for only
P1,500,000. The property was purchased by mike two years ago at a cost of P1,200,000.
Determine the correct taxes due.
Donor’s Tax
Capital Gains Tax
a.
P300,000
P0
b.
450,000
P72,000
c.
360,000
P90,000
d.
P0
P150,000
70. Assuming the parcel of land sold by Mike is classified as ordinary asset determine the correct
taxes
due.
a.
b.
c.
d.
Donor’s tax
P300,000
450,000
360,000
P0
Capital Gains Tax
P0
P72,000
P90,000
P150,000