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Donor s Tax Exam- Answers

property (St. Thomas More School of Law and Business)

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UNIVERSITY OF SANTO TOMAS

IAC 17 - Integrated Review Course in Taxation
TAX – Donor’s Tax

MULTIPLE CHOICE EXERCISES

c. Donation of real (immovable) property, the

1. A tax imposed on the gratuitous transfer of value of which is less than P5,000.
property between two or more persons who are d. Donation of real (immovable) property, the
living at the time the transfer is made value of which exceeds P5,000.
a. estate tax c. income Tax
b. donor’s tax d. transfer tax 8. For the donation to be considered valid,
acceptance of the donation must be made:
2. One of the following is not a distinction between a. During the lifetime of the donor only.
donation inter vivos and donation mortis causa. b. During the lifetime of the donee only.
a. Donation inter vivos takes effect during the c. During the lifetime of the donor and the donee.
lifetime of the grantor while donation mortis d. None of the choices.
causa takes effect after the death of the
grantor. 9. When is the donation perfected?
b. Donation inter vivos is subject to donor's tax a. The moment the donor knows of the
while donation mortis causa is subject to acceptance by the donee
estate tax. b. The moment the thing donated is delivered,
c. Donation inter vivos requires a public either actually or constructively, to the donee
document while donation mortis causa may not c. Upon payment of the donor’s tax
require a public document. d. Upon execution of the deed of donation
d. Donation inter vivos is valued at fair market
value at the time the property is given while 10. The donation of an immovable property shall be
donation mortis causa is valued at the fair made
market value at the time of the death of the a. In writing c. Either A or B
grantor. b. In public instrument d. Orally

3. Donor’s tax is: 11. Using the preceding number, acceptance by the
a. A property tax c. A business tax donee may be made:
b. A personal tax d. An excise tax a. In same deed of donation
b. In a separate document
4. The following are the requisites of a donation for c. Either A or B
purposes of the donor’s tax, except one. d. N e i t h e r A o r B
a. Capacity of the donor
b. Capacity of the donee 12. A non-resident citizen donor is taxed on his
c. Delivery of the subject matter or gift donation of properties:
d. Donative intent a. Situated in the Philippines only.
b. Wherever situated.
5. Which of the following is subject to donor’s tax? c. Situated outside the Philippines only.
a. Those made between persons who were guilty d. Situated in the Philippines only subject to the
of adultery or concubinage at the time of the rule of reciprocity.
donation.
b. Those made to conceived but yet to be born 13. Which of the following is taxable only with respect
children. to properties donated within the Philippines?
c. Those made to a public officer by reason of his a. Resident citizen
office. b. Non-resident citizen
d. Those made between husband and wife during c. Resident alien
their marriage. d. Non-resident alien

6. Which of the following is not subject to donor’s 14. Which of the following statements is correct?
tax? I. A donation by a nonresident alien of shares of
a. Donation mortis causa. stock of a domestic corporation is subject to
b. Donation which will take effect upon birth of
donor’s tax if such corporation have acquired
the donee.
c. A creditor who, out of his affection, cancelled business situs in the Philippines.
the debt of the debtor. II. A donation by a resident alien of shares of
d. A parcel of land in U.S.A. donated by a stock of a foreign corporation will only be
nonresident Filipino to a foreigner. subject to donor’s tax if at least 85% of the
business of such corporation is located in the
7. Which of the following donations inter vivos may
Philippines.
not require that it be in writing?
III. A donation by a nonresident alien of bonds of a
a. Donation of personal (movable) property, the
value of which exceeds P5,000. foreign corporation (90% of the business of
b. Donation of personal (movable) property, the such corporation is located in the Philippines)
value of which is P5,000. is subject to donor’s tax.

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IV. A donation by a nonresident citizen of a a. Gift

b. Capital contribution
franchise is subject to donor’s tax even if c. Donation inter vivos
such franchise is exercised outside of the d. Payment of income
Philippines. 21. What is the tax implication if a corporation
a. III only c. III and IV only condones the debt of a shareholder because of a
b. IV only d. II, III and IV only 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
15. If a donor is a non-resident alien and the rule of donor’s tax.
reciprocity applies, which of the following
b. The condonation is subject to donor’s tax on
properties will not form part of his gross gift?
a. Real properties in the Philippines the corporation because it is based on its
b. Tangible personal properties within the liberality. Moreover, it is equivalent to a
Philippines payment of dividend income on the
c. Intangible personal properties within the shareholder, which is therefore, subject to a
Philippines final withholding tax on income of 10%.
d. All of the choices c. It is tantamount to a declaration of dividend.
Therefore, it is an income which is subject to
16. X, a multinational corporation not doing business
in the Philippines, donated 100 shares of stock of 10% final withholding tax on the shareholder.
said corporation to Mr. “Y”, a Filipino citizen. What However, it is not subject to donor’s tax on the
is the tax liability, if any, of “X” corporation? corporation.
a. The donation is not subject to donor’s tax. d. It is just a simple case of extinguishment of an
b. The donation is subject to 30% donor’s tax obligation which is neither subject to income
based on net gift. tax on the part of the shareholder nor a
c. The donation is subject to graduated rates
donor’s tax on the corporation.
based on net gift.
d. The donation is subject to 30% donor’s tax
based on gross gift. 22. Which of the following renunciations shall not be
subject to donor’s tax?
17. A gift that is incomplete because of reserve powers a. Renunciation by the surviving spouse of
becomes complete when: his/her share in the conjugal partnership or
I. The donor renounces the power absolute community after the dissolution of the
marriage in favor of the heirs of the deceased
II. His right to exercise the reserve power spouse or any other person/s
ceases because of the happening of some b. General renunciation by an heir, including the
event or contingency or the fulfillment surviving spouse, of his/her share in the
of some condition other than because of hereditary estate left by the decedent
c. Renunciation by an heir, including the
the donor’s death. surviving spouse, of his/her share in the
a. I only c. Either I or II hereditary estate left by the decedent
b. II only d. Neither I nor II categorically in favor of identified heir/s to the
exclusion or disadvantage of the other co-heirs
18. Which of the following is subject to donor’s tax? d. None of the choices
I. Pedro donated a house and lot to Ana.
Pedro reserved the right to live in the 23. Which of the following events is not subject to
house and lot until he dies. donor’s tax?
II. Stanley donated a commercial complex a. A Filipino citizen donated a parcel of land
apartment to Wendy. Stanley reserved the located in the United States to B, non-resident
right to the rentals for five years from the alien.
date of donation. Stanley died on the third b. A resident alien made a gift of P200,000 to his
year. daughter on account marriage.
III. Angelica donated a mango farm to c. A non-resident citizen gives his girlfriend a
diamond ring worth P100,000 as a birthday
Sergio. Angelica reserved the right to the gift.
fruits for five years from the date of d. A and B are the only heirs of C. A renounces
donation. Angelica died on the seventh his share of inheritance in favor of B.
year.
24. Jay sold his car to Jana for P200,000. Jay’s car
a. II only c. I and II only
costs P500,000, and had a fair market value of
b. III only d. None of the above
P400,000 at the time of sale. What is the tax
consequence of the sale?
19. When an indebtedness is cancelled without any a. There is a taxable gift of P300,000
service rendered by the debtor in favor of the b. There is a taxable gift of P200,000.
creditor, the forgiveness of debt will result to: c. There is a taxable gift of P50,000.
a. taxable income d. The transfer is for insufficient consideration,
b. distribution of dividend hence, not subject to donor’s tax
c. taxable donation
d. taxable estate 25. Cito Yu has a building located in Shorthorn Quezon
City currently leased to various tenants. Since he is
20. If an individual performs services for a creditor old already and wants to retire from active
who in consideration thereof cancels the debt, the business, he sold the same to Janjan, his son, for
cancellation of indebtedness may amount to a 20 million pesos. The value of the building at the

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time of sale is 40 million pesos. Which of the a. P850,000 c. P1,050,000

following statements is correct? b. P950,000 d. P700,000
a. The sale is for sufficient consideration
b. The sale is for insufficient consideration subject 32. Which of the following is not a deduction from
to donor’s tax gross gift?
a. Unpaid mortgage on the donated property
c. The sale is for insufficient consideration but
assumed by the donee
exempt from donor’s tax since the object is a b. Unpaid real estate tax on the property donated
real property assumed by the donee
d. The sale is subject to capital gains tax and c. Diminution on the donated property specifically
donor’s tax. provided by the donor
d. Unpaid donor’s tax on the donated property
26. Pedro sold to Juan (brother-in-law) his residential assumed by the donee
lot with a market value of P1,000,000 for
P600,000. Pedro bought the lot three years ago 33. Which of the following is not exempt from gift tax
for P400,000. Juan is financially capable of buying under special laws?
the lot. What tax should be imposed and collected a. Donation to Integrated Bar of the Philippines
from Pedro as a result of the transaction? b. Donation to Development Academy of the
a. Capital gains tax Philippines
b. Donor’s Tax c. Donation to Philippine Institute of Certified
c. Real property Tax Public Accountants
d. Capital gains tax and Donor’s Tax d. Donation to International Rice Research
Institute
27. Pedro donated to Juan (brother-in-law) his
residential lot with a market value of P1,000,000. 34. Which of the following is subject to donor’s tax?
Pedro bought the lot three years ago for P400,000. a. Donation to the Philippine National Red Cross
What tax should be imposed and collected from b. Donation to the Development Academy of the
Pedro as a result of the transaction? Philippines
a. Capital gains tax c. Donation directly given to the victims of the
b. Donor’s Tax typhoon Yolanda
c. Real property Tax d. Donation to the City of Davao for public
d. Capital gains tax and Donor’s Tax purpose

28. Alpha Corporation is transferring its office from 35. A tax minimization scheme which is done by
Makati to Manila. It sold to Omega Corporation its spreading the gift over numerous calendar years to
existing lot and office building valued at P80M for avail of lower tax liability -
P60M. What tax should be imposed and collected a. Spread-out method
from Alpha Corporation as a result of the b. Donation of life insurance
transaction? c. Splitting of gift
a. Capital gains tax d. Void donation
b. Donor’s Tax
c. Real property Tax 36. Your bachelor client, a Filipino residing in Quezon
d. Capital gains tax and Donor’s Tax City, wants to give his girlfriend a gift of P400,000.
He seeks your advice, for purposes of reducing if
Next three (3) questions are based on the following data: not eliminating the donor’s tax on the gift, on
Rody, a resident citizen made the following donations. whether it is better for him to give all of the
a. To Mar, a land worth P450,000 in Manila. P400,000 on Christmas (December 25, 2018) or to
b. To Leni, jewelry worth P100,000 in Japan. give P200,000 on Christmas and the other
c. To Miriam, PLDT shares amounting to P150,000. P200,000 on January 1, 2019.
d. To Jojo, a building in Italy P1,600,000 mortgaged
for P50,000 assumed by the donee. Which of the following will be your advice?
e. To Allan, land in Davao worth P300,000. a. Split the donation to totally relieve the donor
f. To Antonio, P300,000 cash, PNB New York from the donor’s tax.
g. P200,000 receivable to Joy, 50% condoned by b. Split the donation to reduce the donor’s tax.
Rody c. Splitting the donation will not reduce the
applicable donor’s tax.
Rody also transferred the following properties: d. The gift should be made on account of their
Selling Price FMV planned marriage to avail of dowry exemption.
Car, Makati P200,000 P300,000
Car, Malaysia 300,000 200,000 37. When the donee or beneficiary is a stranger, the
Rest House, tax payable by the donor for donations beginning
Tagaytay 1,000,000 2,000,000 January 1, 2018 shall be:
Rest House, a. 30% of the gross gifts.
Malaysia 1,500,000 2,500,000 b. 30% of the net gifts.
29. How much is the gross gift? c. 6% of net gifts in excess of P250,000
a. P5,200,000 c. P4,100,000 d. Based on the graduated rates.
b. P4,200,000 d. P3,200,000
38. ABC Corporation donated P600,000 to the
30. If he is a non-resident Alien, his gross gift is: barangay for the purpose of cementing a barangay
a. P3,200,000 c. P1,100,000 road where its factory is located.
b. P1,200,000 d. P850,000 Statement 1: The donation is exempt from donor’s
tax
Statement 2: The corporation may claim full
31. If he is a non-resident alien, and there is deduction for income tax purposes
reciprocity law, his gross gift is: a. Statements 1 & 2 are false

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b. Statement 1 is true but statement 2 is false her graduation, a piece of land costing
c. Statement 1 is false but statement 2 is true P500,000. The fair market value RPT
d. Statements 1 and 2 are true Declaration at the time of donation was
P1,000,000. Its zonal value was P1,200,000.
39. On July 18, 2018, Mr. Dela Cruz gave a property The piece of land had an unpaid mortgage of
with a fair market value of P550,000 to Lester, a P100,000 which was assumed by the donee.
legitimate son, and Jennifer, Lester’s bride, on
account of their marriage celebrated on July 19, To Lourdes, Mrs. Pinagpala's sister; on
2017. The donor’s tax payable is: account of her forthcoming marriage, cash
a. P87,100 c. P84,100 P100,000.
b. P38,000 d. P18,000
October 4 To Bantay Bata, an accredited non-stock non-
The next four (4) questions are based on the following profit organization, P250,000.
data: To Belmont Shipping Company, a piece of
On February 25, 2018, Mr. and Mrs. Salomon donated land valued at P700,000.
their conjugal land worth P500,000 to their three sons. To Anecito, legitimate son, on account of his
One of them is getting married which prompted the forthcoming marriage, cash of P200,000.
donation.
44. How much is the donor’s tax payable of Mr.
On June 9, 2018, they also donated to the child of Mrs. Pinagpala on gifts made on January 2?
Salomon by first marriage, jewelry worth P75,000 on a. P19,600 c. P6,600
account of marriage more than a month after the donation. b. P7,000 d. P600

Finally on December 25, 2018, they donated to the 45. How much is the donor’s tax payable of Mr.
nephew of Mr. Salomon a building worth P750,000, 40% of Pinagpala on gifts made on February 3?
which was co-owned by their Kumpare who agreed to the a. P58,400 c. P36,800
donation and executed the necessary documents donating b. P51,800 d. P45,000
his share.
46. How much is the tax donor’s tax payable of Mr.
40. The donor’s tax due on the February 25 donation Pinagpala on gifts made on October 4?
is: a. P126,000 c. P111,000
a. P14,000 for Mr. & Mrs. b. P111,800 d. P27,000
b. P3, 600 each for Mr. & Mrs.
c. P4, 000 each for Mr. & Mrs. 47. Donor’s tax credit is not allowed to a donor who is
d. P0 for each spouse a:
a. Resident citizen
41. The donor’s tax due on the June 9 donation is: b. Non-resident citizen
a. Mr. – P2,250 for each spouse c. Resident alien
b. Mr. – P11,250; Mrs. – P4,700 d. Non-resident alien
c. Mr. – P11,250; Mrs. – P1,100
d. Mr. – P11,250; Mrs. – P1,875 Use the following data for the next two (2) questions:
48. During the current year, Mr. and Mrs. Cabarles,
42. The donor’s tax due on the December donation is: non-resident citizens, donated the following:
a. Mr. – P9, 875; Mrs. – P13, 500
b. Mr. – P67, 500; Mrs. – P67, 500 Sept. 25: To Leona, a legitimate child, on account of
c. Mr. – P13,500; Mrs. – P13, 500 marriage last month, a conjugal property
d. Mr. – P9, 000; Mrs. – P67, 500 located in the Philippines, FMV, P600,000.
To Leo, nephew of Mr. Cabarles, on
43. The donor’s tax due for their Kumpare on account of marriage, a property located in
December 25 donation is: USA exclusively owned by him with fair
a. P90,000 c. P0 market value of P150,000 (gift tax in USA,
b. P18,000 d. P3,000 P5,000)

The next three (3) questions are based on the following: Oct. 9 : To Leonor, a legitimate child, conjugal
Mr. and Mrs. Pinagpala made the following donations property in the Philippines with fair market
value of P100,000.
during the calendar year 2018 (common property unless
otherwise stated):
The gift tax payable on the September 25 gifts of
Date Donations
the husband is:
January 2 To Maria, legitimate daughter, on account of
a. P8,000 c. P8,600
her forthcoming marriage, 10,000 shares
b. P3,000 d. P7,000
which are not traded in the stock exchange.
The book value at the time of donation was
49. Using the data in the preceding number, the gift
P50 per share.
tax payable on the October 9 gift of the husband
is:
To Juana, family friend of couple, on account
a. P8,000 c. P7,100
of her birthday, P20,000.
b. P3,000 d. P2,500
February 3 To Petra, legitimate daughter, on account of
50. Mr. Riano made the following gifts in 2018:
her marriage on February 1, 2019, a piece of Phils. USA UK Italy
antique jewelry from the capital property of
Gross gift P750,000 P500,000 P250,000 P500,000
Mr. Pinagpala. The fair market value of the Deductions 250,000 200,000 150,000 150,000
jewelry was P50,000. Tax paid — 25,000 12,000 10,000

To Estela, legitimate daughter, on account of

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The donor’s tax payable is:

a. P26,000 c. P33,520
b. P25,600 d. P30,800

51. Statement 1: A donation can be both a part of the

gross gift of the donor and a 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

52. 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, False c. True, True
b. False, True d. False, False

53. 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. Bothe Statements are correct
d. Both Statements are wrong

54. Statement 1: The Commissioner of Internal

Revenue shall have authority to grant under
meritorious cases, a reasonable extension of not
more than 30 days for filing the donor’s tax return.
Statement 2: In case of gifts made by
nonresidents, the return may be filed with
Philippine Embassy or Consulate in the country
where he is domiciled at the time of the transfer,
or directly with the Office of the Commissioner.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

55. When a donor with several donations during the

year fails to file the donor’s tax return for each of
the dates that donations were made (select the
wrong statement):
a. Such failure shall be cured by filing a donor’s
tax return at the end of the year reflecting all
donations made within the year and paying the
taxes shown in that one return.
b. Each failure is subject to penalties for non-
filing of return and nonpayment of the tax on
time.
c. He can voluntarily file late the donor’s tax
return for each date that donations were made
and make payments on the tax due shown on
each return, with penalties.
d. None of the above

-done-

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