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DONORS TAX MULTIPLE CHOISE QUESTIONS

1. An act of liberty whereby one disposes gratuitous of a thing or right in favor


of another who accepts ita. Succession
c. Donation
b. Occupation
d. Tradition
2. A tax imposed on the gratuitous transfer of property between two or more
person who are living at the time the transfer is made
a. Estate tax
c. Income tax
b. Gift tax
d. Transfer tax
3. A donation made by a stockholder to a corporation is subject to donors tax
because of the following principles, except
a. Entity theory
c. Benefit received principle
b. Lifeblood theory
d. Tax benefit rule
4. What is the tax implication if a corporation condones the debt of a
stockholder because of a good thing done by the latter to the corporation?
a. The condonation is based on the liberality of the corporation; therefore, it
is subject to donors tax.
b. The condonation is subject to donors tax on the corporation because it is
based on its liberality. Moreover, it is equivalent to a payment of dividend
to the stockholder which is, therefore, subject to a dividend tax of 10%.
c. It is tantamount to a declaration of dividend. Therefore, it is an income
which is subject to 10% dividend tax on the stockholder. However, it is
not subject to donors tax on the corporation.
d. It is just a simple case of extinguishment of an obligation which is neither
subject to income tax on the stockholder not subject to donors tax on the
corporation.
5. ABDON went to ALAMBRA RESORT and was given a prize of P50, 000.00 by
the resort for being its 1,000 th guest. Is the prize subject to donors tax?
Income Tax?
Donors Tax
Income tax
a.
Yes
Yes
b.
No
Yes
c.
Yes
No
d.
No
No
6. The following are the requisites of a donation for purposes of the donors tax,
except;
a. Capacity of the donor
b. Capacity of the done
c. Delivery of the subject
d. Donative intent
7. A donation of one (1) hectare of timberland
a. Can be done orally or in written

b. Must be in writing
c. Maybe in private document
d. Must be in public document
8. One of the following is a valid donation
a. Oral donation of a cellular phone worth P4,5000
b. Oral donation of a passenger jeepney worth P150,000
c. A parcel of land worth P5,000 in private document
d. A parcel of land worth P500,000 in a private document
9. Which of the following constitutes a taxable gift?
a. Creditors gratuitous discharge of a debtors obligation
b. One day rent- free use of anothers property
c. A gratuitous transfer by an incompetent
d. An agreement to make a future transfer which is not supported by a
consideration
10.AVANCENA donated a share of stocks of BAES Corporation to BONAOBRA on
April 20, 2015 with a right to revoke it. The donor delivered the property April
25, 2015. On June 20, 2015 AVANCENA relinquished the right to revoke. Ten
days after, the donor died. For purpose of donors tax, the gross gift should
be bases on the value of the shares on
a. April 20, 2015
c. June 20,2015
b. April 25,2015
d. June 30, 2015
11.BUCARILE wrote a letter to CATUSALEM on December 31, 2014 donating her
car worth P350, 000. The letter was received by the latter on January 7, 2015
who accepted the donation. The letter of acceptance was received only by
Warren on January 15, 2015. The donors tax was not paid until May 22,
2016. The donation was consummated on
a. December 31, 20114
c. January 7, 2015
b. January 15, 2015
d. May 22, 2016
12.On August 18, 2015 GLADYS loaned to her sister ANDREA P200, 000 at an
interest of 12% per annum payable one (1) year thereafter. One month
before the debt become due, Marthas husband died. Consequently, GLADYS
informed her sister that she is condoning the loan including the interest. How
much is the value of the donation made by Elizabeth to Martha?
a. P200, 000
c. P220,000
b. P224,000
d. None
13.Which of the following examples is not taxable
a. A Filipino citizen donated a parcel of land located in the United States to B,
nonresident alien.
b. On June 12, 2015, A made a gift of P200 ,000 to his daughter on account
of her marriage celebrated may 21, 2014.
c. MR.DELEGENCIA, a multi-millionaire, gives his wife a diamond ring worth
P120, 000 as birthday gift.

d. A and B are the only heirs of C. A renounces his share of inheritance in


favor of B.
14.Which of the following is subject to donors tax?
a. Donation inter-vivos to Iglesia ni Kristo
b. Donation inter-vivos to International Rice Research Institute.
c.
Cash contribution to a political candidate, duly reported on the
Commission on Elections
d. Remission of debt where the debtor did not render service in favor of the
creditor.
15.A tax minimization scheme which is done by spreading the gift over
numerous calendar years to avail the lower tax liabilitya. Spread-out method
c.
Donation of life
insurance
b. Splitting gift
d. Void donation
16.The spouses NAPINTAS and NATAER wanted to donate a parcel of land to
their son CARL JOHN who is getting married in December 2014. The parcel of
land has a zonal valuation of P420,000.00. What is the most efficient mode
of donating the property?
a. The spouses should first donate in 2014 a portion of the property valued
at P20, 000.00 then spread the P400,000.00 equally for 2015, 2016, 2017
and 2018.
b. Spread the donation over a period of 5 years by the spouses donating
P100, 000 each year from 2014-2018.
c. The spouses should each donate a P110, 000.00 portion of the value of
the property in 2014 then each should donate P100, 000.00 in 2015.
d. The spouses should each donate a P100, 000.00 each in 2015. Then in
2016, Helena should donate the remaining P20, 000.00.
17.Statement 1: When the done is exempt from income tax, the donation made
by a taxable individual is also tax exempt.
Statement 2: Proceeds of life insurance policy on the life of decedent where
the designation of the beneficiary is irrevocable is always subject to donors
tax.
Statement 1
Statement 2
a.
True
False
b.
False
True
c.
False
False
d.
True
True
18.Statement 1: The agreement between the donor and the done that the latter
shall assume the tax burden is binding on the government.
Statement 2: There is no donors tax in a donation on account on marriage if
the marriage did not actually take place.
a. Only the first statement is wrong.
b. Only the second statement is wrong.
c. Both statements are wrong.

d. Both statements are correct.


19.Antiquia donated a 1000 square meter land to Botor with a condition that
within two years from the date of donation, Botor will construct a two-story
building thereon, and that failure of the done to comply with the condition
shall be sufficient ground for the revocation of the donation.
I.
II.

There shall be donors tax on the donation even if it may be revoked in


case of non-fulfillment of the donation.
In case of revocation of the donation, the donors tax paid to the government
may refund to the donor.

Which of the following statements is correct?


a. Statement 1 only
b. Both statements

c. Statement 2 only
d. Neither statements

20.Which of the following statements is false? The gross gift of a non-resident


alien.
a. Will include all intangible personal properties regardless of location.
b. Will include all intangible personal properties situated in the Philippines.
c. With reciprocity will not include all intangible personal properties
regardless of location.
d. Without reciprocity will not include all intangible personal properties
situated outside the Philippines.
21. Which of the following is not considered as an intangible personal property
within?
a. Franchise which must be exercised in the Philippines.
b. Shares of stocks issued by a domestic corporation.
c. Obligation or bonds issued by a foreign corporation with business situs in
the Philippines.
d. Shares of stocks issued by a foreign corporation 51% of the business of
which is located in the Philippines.
22.Given the following statements:
I.
A donation by a nonresident alien of shares of stock issued by a
domestic corporation is subject to donors tax if such shares have
acquired business situs in the Philippines.
II.
A donation by a resident alien of shares of stock of a foreign
corporation will only be subject to donors tax if at least 85% of the
business of such corporation is located in the Philippines.
III.
A donation of a nonresident alien of bonds issued by a foreign
corporation is subject to donors tax if 90% of the business of such
foreign corporation is situated in the Philippines.
IV.
A donation by a nonresident citizen of a franchise will be subject to
donors tax in the Philippines even if such intangible is being used
outside the Philippines.
Which of the above statements is/correct?

a. Statements I and III


c. Statements III and IV
b. Statements II and IV
d. Statements I and IV
23.Which of the following cannot claim P10,000 exemption on gifts given on
account of marriage?
a. Resident citizen
c. Resident alien
b. Nonresident citizen
d. Nonresident alien
24.One of the following exemptions cannot be claimed by a non-resident alien
donor.
a. P10,000 dowries or gifts given on account of marriage of a legitimate son.
b. Donation to the National government, its agencies and instrumentalities
or political subdivision thereof.
c. Donation to a non-profit educational institution not more than 30% of the
gift is used for administration purposes.
d. The exemption of P100,000 in the tax table for donors tax.
25.Given the following statements:
I.
A donation by a husband and wife jointly of a conjugal property will
require two separate computations of donors tax which will be
contained in two separate donors tax return.
II.
If the property donated is a community property of the spouses, the
spouse who opposes the donation shall not be considered as a donor
and will not be required to pay donors tax return.
III.
If the property donated is a community property of the spouses, each
of them is considered as a donor of his or her share in the co-owned
property and shall be liable for whatever tax that may accrue on such
donation.
IV.
As a rule, a donation inter vivos between spouses during the marriage
is voidable.
Choose the best answer.
a. Statements 1and 4 are true
are true
b. Statements 1 and 2 are true
are true

c. Statements 1, 2, and 3
d.

Statements 2 and 3

26.Given the following statements:


I.
If the marriage is not validly solemnized, the donor is not entitled to
the P10,000 exemption because the donation prompter nuptia is not
also valid.
II.
Donations prompter nuptia by an adopting parent on account of the
wedding of his child by natural adoption will entitle the donor to an
exemption from gross gift of P10,000.
III.
A wedding ceremony which was solemnized by the mayor is not valid
because he is not authorized to solemnize marriages under the Family
Code, thus the P10,000 exemption from gross gift cannot be claimed
by the donor of a donation prompter nuptia.

IV.

There is no P10,000 exemption from gross gift on a donation prompter


nuptia given by a parent to his daughter who will celebrate her 50 th
wedding anniversary.

Choose the best answer.


a. Statement 1 is true
are false
b. Statement 2 is false
are true
27.Justina donated cash ti his son
follows:
January 15, 2015
March 10,2015
July 15, 2015
September 10, 2015 -

c.

Statements 2 and 3

d. Statements 1 and 2
on account of marriage on October 2014 as
P25,000
20,000
50,000
100,000

The donors tax due on September 10, 2015 isa. P750


b. P1,700

c. P1,350
d. Exempt

28.Which of the following donations result to a net gift of P80,000?


a.
FRANCISCO donated property to GALANG with a market value of
P140,000. The property is subject to a mortgage indebtedness of P60,000
which was paid by the donor at the time of the donation.
b. MONDERONDO requested OLIVEROS to pay MONDERONDOS liability with
MULLANIDA in the amount of P100,000 and in return, the personal
property of MONDERONDO valued at P180,000 will be donated to
OLIVEROS.
c. The daughter of REO was married to her boyfriend. As a gift, REO donated
cash worth P100,000 to his daughter.
d. Property worth P80,000 was donated by Bibong to Barangay Maaliwalas
for use as site of the Barangay Hall.
29.The following does not result to a gross gift.
a. Donation to the Development Academy of the Philippines.
b. Donation of a parcel of land to brother, the donation is in private
document.
c. Donation of a real property to the City of Manila.
d. Donation of property the encumbrance therein was assumed by the done.
30.Exempted from the donors taxation are gifts made
a. For the use of the barangay.
b. In consideration of marriage
c. To a school which is a stock corporation.
d. To a not-for-profit government corporation.
31.All of the following except one, are exempt from donors tax. Which is it?

a.
b.
c.
d.

Donation
Donation
Donation
Donation

to the Philippine Red Cross.


to the Development Academy of the Philippines.
directly given to the victims of the eruption of Mount Bulusan.
to the City of Davao for public purpose.

32.A non-stock, non-profit school always had cash flow problems, resulting in
failure to recruit well trained administrative personnel to effectively manage
the school. In 2015, DON LEON donated P100 million pesos to the school,
provided the money shall be used solely for paying the salaries, wages and
benefits of administrative personnel. The donation represents less than 10 %
of DON LEONs taxable income for the year. Is he subject to donors taxes?
a. No, since the donation is actually, directly, and exclusively used for
educational purposes.
b. Yes, because the donation is to be wholly used for administrative
purposes.
c. Yes, since he did not obtain the requisite NGO certification before he
made the donation.
d. No. because the donation does not exceed 10 % of his taxable income for
2015.
33.There is reciprocity when the donor and the donated propertyDonor
Property
a. Nonresident alien
intangibles
b. Nonresident citizen
immovable
c. Nonresident alien
Tangible personal
d. Resident alien
Any kind of property
34.Which of the following statements is false?
a. Donors tax applies also to juridical persons.
b. For purposes of donors tax, second cousins are strangers to each other.
c. Encumbrance on the property donated, if assumed by the donor is
deductible for donors tax purposes.
d. As a rule, donation between husband and wife during the marriage is void.
35.Which of the following is not a factor in the determination of taxable gifts?
a. Identification of transfers included in gross gift
b. Application of exempt transfers
c. Subtraction of allowed deductions,
d. Multiplying net gift by the applicable rates.
36.Given the following statements:
I.
The donors tax payable on the present donation includes the previous
donations made during the current year.
II.
It is not proper to add the prior net gifts during the current year
because the taxes paid on the donations will just be credited from the
donors tax computed.
III.
The tax rate on the tax table for donors tax are relatively lower than
the tax rates in the tax table for estate tax.

IV.

The highest tax rate on donors tax is higher than the highest tax rate
on estate tax.

Choose the best answer.


a.
b.
c.
d.

Statements 1 and 2 are false


Statements 1, 2, and 4 are false
Statements 3 ad 4 are correct
Statement 2 is false.

37.A stranger in donors taxation


a. Great grandchild
adoption
b. Nephew

c.

Child

by

natural

d. Grand auntie

38.RISHEL who is a single, gave an outright gift of P150,000 to a friend, DALEVIN


who needed the money to pay medical expensesa. The donation is not taxable because the gift is outright.
b. The donors tax payable is P1,000
c. The donors tax is P45,000
d. The donation is deductible from the gross income of Sayers
39.Celia donated P110,000.00 to her friend Victoria who was getting married.
Celia gave no other gift during the calendar year. What is the donors tax
implication on Celias donation?
a. The P100,000.00 portion of the donation is exempt since given in
consideration of marriage.
b. A P10,000 portion of the donation is exempt being a donation in
consideration of marriage.
c. Celia shall pay a 30% donors tax on the P110,000 donation.
d. The P100,000 portion of the donation is exempt under the rate schedule
for donors tax.
40.Given the following statements:
I.
For the purposes of donors tax, a relative done must always be a
blood relative; otherwise he is a stranger to the donor.
II.
Donation by stockholder to his wholly owned corporation is subject to
the donors tax computed based on the tax table.
III.
For purposes of donors tax, first cousins who have never met together
personally because the donor is in the Philippines, while the done grew
up in the US are strangers to each other.
IV.
For donors tax purposes, the brother of the daughter of the donors
son is a stranger to the donor.
Choose the best answer:
a. Statements 1 and 2 are false
b. All statements are false

c. Statements 2 and 4 are false


d. No statements is false

41.ABNO de SOBRA donated P500,000


80% of the outstanding capital stock
tax due to the donation isa. P14,000
b. P150,000
B

to XYZ Corporation. The donor owns


of the done-corporation. The donors
c. P40,000
d. None

Whenever the done is a judicial person, it is always considered to be


stranger to the donor regardless of the extent of control by the donor on
the capital of the juridical person. Thus, the tax is computed as follows:
Net gift

500,000

Rate of tax (stranger)

30%

Gift tax due

150,000

42.When Alcalas son, Biscocho, was married to his childhood sweetheart,


Calalang, Alcala gave as wedding gift a residential house worth P1,500,000 to
his son, and a brand new car to Calalang with a value of P700,000. All the
time of the donation, the residential house was mortgage with metrobank for
P200,000 which was assumed by Biscocho. The donors tax payable by
Alcala on the above donation isa. P93,200
c. P109,200
b. P92,600
d. P277,200
D
To Biscocho:
Gross gift

1,500,000

Less: deduction/Exemption
Mortgage assumed by done

200,000

On account of marriage

10,000

Net gift

210,000

1, 290,000

Tax on P1,000,000
290,000x8%
Gift tax due

44,000
23,200
67,2000

To Calalang:
Net gift

700,000

Rate of tax (stranger)

30%

Gift tax due

210,000

Gift tax due on Biscocho

67,200

Gift tax due on Calalang

210,000

Total donors tax payable

277,2000

Number 37 to 39 are based on the following data:


43.Annie donated the following properties
Land in Los Angeles, California, USA
Land and building in Jolo, Sulu
Car registered in the States of California, USA
Jewelries in the Philippines
Shares of stock in a corporation based in USA
Accounts receivable, debtor is in the Philippines

P 250,000
175,000
225,000
45,000
60,000
25,000

If Annie is a resident citizen, the gross gift isa. P780,000


b. P295,000
A

c. P245,000
d. P220,000

Land , California
Land and building in Sulu

P250,000
175,000

Car, California

225,000

Jewelries in the Philippines

45,000

Share of stocks, USA

60,000

Accounts receivable, Philippines


Gross gift

25,000
780,000

44.The gross gift of Annie if she is a nonresident alien without reciprocity isa. P780,000
c. P245,000
b. P295,000
d. P220,000
C
Land and building in Sulu
Jewelries, Philippines
Accounts receivable, Philippines
Gross gift

175,000
45,000
25,000
245,000

45.The gross gift if Annie is a nonresident alien with reciprocity isa. P780,000
c. P245,000

b. P295,000
D

d. P220,000

Land and building , Sulu

175,000

Jewelries, Philippines

45,000

Gross gift

220,000

46. Butch made donations to his children in 2015. I which of the following
successive donations will Butch pay donors tax?
a. January 15 To Alma on account of marriage, P40,000.
b. March 15 To Ara on account of graduation, P45,000
c. May 15 To Aiko on account of her 18th birthday, P50,000
d. In all of the above donations.
C
Net gift, May 15

P50,000

Add: Net gift Jan. 15 (40,000-10,000)

30,000

March 15

45,000

Total net gifts

125,000

Tax on P100,000

exempt

25,000x 2%
Gift tax

P500
500

Donation on January 15 and March 15 are not subject to tax because they
do not exceed the P100,000 exemption in the tax table.

47.Mr and Mrs. Abubot donated the following community properties to their
children on May 30, 2015.
Amount
Donee
P125,000
Baron For graduating cum laude at Central Philippine University,
Iloilo City
P200,000
Caricot On account of marriage celebrated April 30, 2014
?
Dakila
For placing 3rd in the May 2015 CPA Licensure
Examinations
If the donors tax payable by Mr. Abubot is P10,500, the amount of the
donation given by the spouses to Dakila is?
a. P250,000
c. P500,000
b. P490,000
d. Cannot be determined
C
Algebraic approach:

Let X = Over P200,000 of net gift


4% X = Rate of tax on over P200,000 of net gift
4%X+2,000 = 10,500
4%X =

10,500-2,000

8,500/4%

212,500

Excess over

212,500

First

200,000

Net gift

Let X =

Share of Mr. Abubot on the donation of community

2X

Total donation of spouses

412,500

property
=

(125,000+200,000)1/2 +X

412,500

62,500+100,000+X

412,500

412,500-162,500

250,000

2X

500,000

Alternative Solution:
To Baron (125,000/2)

62,5000

To Caricot (200,000/2)

100,000

To Dakila (squeeze)

250,000

Gross gift

412,500

Less exemptions

-----------

Net gift
Tax on P200,000
212,500x4%
Gift Tax

412,5000
2,000
8,500
10,500

48.Magulang gave gifts to the following persons to his 75 th birthday:

A second hand car worth P350,000 to Kaskasero, his trusted driver. The
donation was made orally. Since then the driver had taken possession of the
property.
To his Mayordoma, Miss Angut, a lot with bungalow theron. The value of the
property is P1,200,000. The donation provides that it may be revoked
anytime at the pleasure of Magulang.
His flower shop worth P700,000 to Hardinero, his gardener. The donation is
provided in his will.
Cash of P50,000 each to the three housemaids.
How much is the donors tax due on the above donations?
a. P720,000
c. P45,000
b. P100,000
d. P1 (,000
C
Gross gift (50,000x3)

150,000

Rate of Tax (stranger)


Gift tax

30%
45,000

The donation to Kaskasero is void.


reduced in writing.

To be valid, the donation must be

The donation to the bungalow to Miss Angut is a revocable transfer.


Therefore, the donation is subject to estate tax.
The donation of the flower shop to Hardinero is a mortis causa donation.
It is subject to estate tax.
The donation to the housemaids are donations to stranger.