ReSA ‘The Review School of Accountancy Bei, No. 735-0807 & 734-3080 TAXATION ‘TAMAYO/LIM/CAIGA/MANUEL ‘VK201. A: DRILILIN DONOR’S TAX TRUE OR FALSE: Write the word True when the stateurent is correct and the word False when the statement 18 incorrect. When your answer Is Faise, under the word or phrase that made the statement incorrect and make the corrections to make it true. “whe: False 1. Donation mortis caus is subject to donor's tax. 2 Inter vivos ROSS GIETS | Donation i an act of liberalty whereby 0 person disposes gratuitously of a thing oF right in favor of anther who accepts t Donation safer vis happens when the danor iniendls that the donation shal take effect du the soperty shall be delivered till after his death, "he donation #5 perfected the moment the donor kriows of the acceptance by the donee. 4. For the donation to be considered vali, «cceptance of the donation must be made during the Ifetime of the donor and the donee, ‘he donor's tax shall not apply unless and until there is a completed gift. Donation 1s completed the moment the thing donated is «ctually delivered to the donee. ‘aft that 1s incomplete because of reserved powers, becomes complete when te donor renounce’ the power oF his Maht to exercise the reserved power ceases because of some event oF contingency or the fulfilment of some condition, other than the donors death. 8. The law in force at the time of the completion of the donation shall govern the imposition of donor's tax. 8. The donation of a movable may be made only in writing. 10. An oral donation requires simultaneous delivery of the thing or of the document representing the right donated. 11. If the value of the personal property donates e«cted: three thousand pesos, the donation and acceptance shall be made in wnting to be consideted a valid donation. 12. Donation of immovable property requires that the donation be made in @ pubic document specifying therein the Property donated and the value ofthe characs which the donee must satisty 1B. The acceptance of a donated immovable property may be made in the same Deed of Donation or ina separate public document, but shall not take effect unless tf done during the ietime of the donor. 14, If the acceptance of the donated immovable property is made in a separate instrument, the donor shail be notified thereof in an authentic form, and this step shall not be noted in both Deed of Donation and Deed of Acceptance. 15, The donor’ tax shall apply whether the transfer isn trust or otherwrse, whether the gif 1s direct or indirect, and whether the property is real or personal, tanaible or itanaibie 16, Donation made between business organizations and those made Between an individual and a business organization shall be considered as donation made to a strange 17, Any provision of law to the contrary notwthsiandino, zy contnbution in cash or in kind to any candidate or politcal party or coalition of parties for campaign purposes duly ceported to the COMELEC shall not be subject to the payment of any aift tax. 18. Renuncation by the surviving spouse of his/her share: sn the conjugal partnership or absolute community after the dissolution of the mariage in favor of the heirs of the deceased spouse or any other person/s is not subject to donor's tax. 19. General renunciation by an heir, Including the surviving spouse, of hisyher share inthe hereditary estate left by, the deceased 1s not subject to donor's tax, unless specifically and categorically done in favor of identified heit/s te the exclusiot or disadvantage of the co-heirs in the hereditary estate. 20. A transfer ts gratuitous oF without consideration and accordinaly qualifies 4s a donation, if no economic benefit measurable in money or money's worth Foweds to ine transferor from the transferee. 21. The gross gifts of a donor who is a citizen, whether resident or non-resident of the Philippines, wil include alt properties wherever situated, 22. The gross gifts of a donor who is an alien, wheter resident or non-resktent of the Phiippines, wil include only broperties situated in the Philippines. 23, The rule of reciprocity that applies to estate tax also applies to non-resident alien donor as far as donation of intangible personal property situated in the Philippines. 24, With the exception of moderate donations for charity or on occasions of family rejoicing, neither spouse may donate any community property or conjugal property without the consent of the other. 25. Every donation between the spouses dunng the marriage shall be vod except for moderate gifts, which the spouse ‘may give each other on the occasion of any famiy rejorcing, and donation morts causa, 26. Husband and wife are considered as Joint tixpaye! for purposes of donor's tax. 27. If what was donated 1s @ conjugal or community property and only the husband signed the deed of donation, there is jonly one donor for donor's tax purposes, without prejudice to the right of the wife to question the validity of the donation without her consent pursuant to the pertinent provisions of the Civil Cade of the Philippines and the Family Code of the Philippines, 28. If properties are gwen as a git, they shail be appraised atts fair market value as of the time of donation. TX-201A 19 hes lfeume, thoughReSA: The Review School of Accountancy Page 2 of 3 20. In showing gross gifts the donors ta. return, real property should be valued at the current and fair market value, sshow' in the assessment rots, oF the fair marke? vali, as determined by the Commissioner of Internal Revenue, awinchever 15 higher 40, I ahowing gross gifts n the donor's tax return, personal property should be valued at current fair market value oF at cost, whichever 1s lower: 31 Wheve property, other than veal property subject to capital gains tax, is transferred for less than an adequate and full considerabon in money of money's worth, then the amount by which the fair market value of the property exceeded the value of the consideration shall, for the purse of donor's tax, be deemed a gift, and shall be included 19 computing the amount of gifts made during the caters cau 32. Asale, exchange, or other transferct prooerty :nac in the ordinary course of business (a transaction which is 2 ona dat arslength, ad ee ror any dative tent le conse as made for an adequate and full nsaderation 1n money oF Taoney's Wo e concept of an arm’s length transaction assures that beth parties in the deal are acting in their own self cyesi aud are not subject to any pressure or duress from the other party and there is no collusion between the ouyer and the seller 34 Belore TRAIN (R.A. No. 10963), when the donee or beneficiary is stranger, the tax payable by the donor shall be thirty percent (30%) of the gross gifts. 36, Under the TRAIN (R.A, No, 10963), the tax for eaci calendar year shall be sbx percent (6%) computed on the basis of the total gifts in excess of Two hundred fifty thousand pesos (P250,000)exempt gift made during the sndiar year whether the donee is a reletive or a stranger 1 Tne 2 Tre 3. True 4. True 5. True = [i subject to dono ‘whether. resdent_or —non-resi ‘non-resident aien only | Phiippines 4 joint taxpayers __. _ 7 at curent fair market vale ora cost __| whichever is lower gross gifts: “| Separate and distinct taxpayers | at current fair market value MPTIONS OF CERTAIN M FTSAN eat gift shall mean the net economic beneft Irom the transfer tnat accrues to the Fret PRAIN (RA. NO. 10963), the amount of dowry that can be glen by @ doncr to 2 donee cannot exceed 10,000. 4, Befire TRAIN (PLA. No, 10963), 2 gift given by a parent to his legttmate, natural or adopted chid isnot ented to 10,000 dowry exemption unless given on account of mariage. 4, Before TRAIN(RA, No, 10963), an aunt who naturally alopted her niece can claim dowry exemption on gts made ‘on account of marriage. 5, before TRAIN (RA. NO, 10963), a dowry given beyond one year after the celebration of mariage shall be alowed as Geductionfexemption ifthe total exempt dowry dimed has not yet exceeded P10,000 6, Sefeee TRAIN (A, No. 10963), in case where 2 property dovated comes from common properties, the husband and the wife can claim dowry exempbon being canurs of cane-half each of the common property 7, Before TRAIN (RA. No. 10963), 2 father-doncr donated properues on account of mariage to his two (2) sons, he can cdaim a maximum of 20,000 dowry exemption 8, Unies the TRAIN (R.A. No. 10963), downes or gifts on account of marriage are no longer alowed to be deducted from the gross gits of all donors. 9, Cath dorar ee required to file 2 separate donors tax retum except married donors who are required to fle @ jont donor's tax return, 10. Gifts made to or for the use of the National Government cr any entity created by any ofits agencies whether o* not Conducted for prof, or to any poitical subsivision of the Said Government is @ deduction from gross aits of all donors, whether resident or not. 11, Dgovekion inter vivos to a charitable organization 1s deductible from the gross gifts of both resident alien and nion- resident alien donors. 12. Rdosation inter vivos to a parish church, the same being 2 religious organization, js allowed as deduction from the gross oft 13, A denstion inter vivos to non-profit research organization 1s a deduction from the gross gifts provided not more than - 30% of said gifts shall be used by such donee for administration purposes. 14. An unpard mortgage on the donated property assuined by the donee is a deduction from the gross gifts of the donor TAXATION: DRILL IN DONOR’S TAX TX-201 AReSA: The Review School of Accountancy Page 3 of 3 15. A diminution on the property donated specifically provided by the doncr 1s a deduction from the gross gifts of the donor genation to the Integrated Bar of the Phiippines (IB) ic exempted from donor's tax. A donation to the Philippine Insvtute of Certified Public Accountants (PICPA) is exempted from donor's tax 15, Tax credit for foredgn donor's taxes paid by a donor, including non-resident alien donor, is allowed as deduction trom mneippine donor's tax due. \able donor's 12x credit 1s lower between the statutory limit and the actual foreign donor's tax. vy individual who makes any transfer by gift (except those which are exempt from donor's tax) shall, for the se OF doner’s tax, make a retum under oath at feast in duplicate. The donor's tax return shall be fled within 30 dys after the date the gift is made. ‘The donor's tax due shail be paid at the time of filing of donor's tax return, n case of resident donors, the donor's tax return shal be filed with authorized agent bank, Revenue District Officer, Sevenue Collecton Officer of duly authorized Treasurer of the city or muniapalty where the donor was domiciled at the tme of the transfer 24. Ih case of both non-resident citizen anc non-resident alten donors, the donor's tax retum shall be filed wath Philippine 1s5y oF Consulate where they are domiciled at the time of the transfer, or Office of the Commissioner. ‘The donor engaged in business shall give «nati of donacon on every donation worth at least PS0,000 to the ROO which has jurisdicbon over his place of business within 30 days after receipt of the qualified donee institubon's duly sued Certificate of Donation, which shall Le attached to the said Notice of Donation, stating that not more than 30% of the said donabons/aifts for the taxable year shell be used for administration purposes. | he amount of dowry can excoed PIODD. Rie | emit ey om ewe a | ratrally aopea er race cannot Gai Gowy | _| exemption, must be legally adopted —_ J "Sen ne year rm he een of | 1 Exempted from donee’ tax Not exempted from donor's tax ~Trincluding non-resident atien donor excluding non-resident af “18. False ‘THOT: It is not what one has that makes him generous, it is his attitude. - Tamthewise TAXATION: DRILL IN DONOR’S TAX TX-201 A