Part 5 Donor S Tax

Part 4 (Donor’s Tax)
A. Concept of Donation & Donor’s Tax Computation of Gross Gift
1. An act of liberality whereby one disposes gratuitously of a thing or right

in favor of another who accepts it.
a. succession c. donation
b. occupation d. tradition
Answer: C
2. A tax imposes 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. gift tax d. transfer tax
Answer: B
3. The gift tax imposed on the transfer of property (not on the property
itself), which it has been sustained as a (an)
a. excise tax c. donee’s tax
b. property tax d. poll tax
Answer: A
4. A donation made by a stockholder to a corporation is subject to a donor’s

tax because of the following principles except:
a. entity theory c. benefit received principle
b. lifeblood theory d. tax benefit rule
Answer: D
5. What is the implication if a corporation condones the debt of a stockholder

because of the good things done by the latter to the corporation?
a. The condonation is based on the liberality of the corporation:
therefore, it is subject to donor’s tax.
b. The condonation is subject to donor’s tax on the corporation because

it is based on its liberality. Moreover, it is equivalentto 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 donor’s 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 nor subject to donor’s tax on
the corporation.
Answer: C
6. Madz went to Bersabaren Resort and was given a prize of P50,000 by the
resort for being its 1,000th guest. Is the prize subject to donor’s tax?
Income tax?
Donor’s Tax Income Tax
a. Yes yes
b. No yes
c. Yes no
d. No no
Answer: B
7. The following are the requisites of a donation for a purpose of the donor’s
tax except (RPCPA)
a. capacity of the donor
b. capacity of the donee
c. delivery of the subject matter of gift
d. donative intent
Answer: B
8. A donation of one (1) hectare of timberland.

a. can be done orally or in writing
b. must be in writing
c. maybe in a private document
d. maybe in a public document
Answer: D
9. One of the following is a valid donation
a. oral donation of a cellular phone worth P4,500
b. oral donation of a passenger jeepney worth P150,000
c. a parcel of land worth P5,000 in a private document
d. a parcel of land worth P500,000 in a private document
Answer: A
10. Which of the following constitutes a taxable gift?
a. creditor’s gratuitous discharge of a debtors obligation
b. one day rent-free use of another’s property
c. a gratuitous transfer by an incompetent
d. an agreement to make a future transfer which is not supported by a

consideration.
Answer: A
11. Antonio donated shares of stocks of Cayetano Corporation to Barandilla on

APRIL 20, 2008 with a right to revoke it. The donor delivered the property on
April 25,2008. On June 20, 2008 Antonio relinquish the right to revoke. Ten
days after, the donor died.
For the purposes of donor’s tax, the gross gift should be based on the
value of the shares on
a. April 20, 2008 c. June 20, 2008
b. April 25, 2008 d. June 30, 2008
Answer: C
12. Warren wrote a letter to Lamont on December 31, 2006 donating his car
worth P350,000. The letter was received bythe latter on January 7, 2007 who
accepted the donation. The letter of acceptance was received only by Warren on
January 15, 2007. The donor’s tax was not paid until May 22, 2008. The
donation was consummated on
a. December 31, 2006 c. January 7, 2007
b. January 15, 2007 d. May 22, 2008
Answer: B
13. On August 18, 2008 Elizabeth loaned to her sister Martha P200,000 at an
interest of 12% per annum payable one year thereafter. One month before the
debt becomes due, Martha’s husband died. Consequently, Elizabeth 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. 200,000 c. 222,000
b. 224,000 d. none
Answer: C
14. Which of the following examples is not taxable? (RPCPA)
a. A filipino citizen donated a parcel of land located in the United

States to B, a nonresident alien
b. On June 12, 2006, A made a gift of P200,000 to his daughter on

account of her marriage celebrated May 1, 2005
c. Mr.Ramos, a multi-millionare, gives his wife a diamond ring worth

P120,000 as a birthday gift
d. A and B are the only heirs of C. A renounces his share of
Answer: D
15. One of the following is subject to donor’s tax
a. Donation inter vivos to Iglesia Ni Cristo
b. Donation inter vivos to INTERNATIONAL RICE RESEARCH INSTITUTE.

c. Cash contribution to a political candidate,duly reported to the
Commission on Election.
d. Remission of debt where the debtor did not render services in favor
of the creditor.
Answer: D
16. 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. donation of life insurance
b. splitting of gift d. void donation
Answer: B
17. Statement 1: when the done is exempt from in income tax the donation made
by a taxable individual is also tax exempt.
Statement 2:proceeds of life insurance policy on the life of the decedent

where the designation of the beneficiary is irrevocable is always subject to
donor’s tax.
Statement 1 Statement 2
a. true false
b. false true
c. false false
d. true true
Answer: C
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 donor’s tax in a donation on account of 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

Answer: C
19. On June 23 2008, Ryan, a mentally defective 12-year old boy, executed a
deed donating to his brother Aldy a one hectare of land worth P250,000 located
in Magaroa, Camarines Sur which was also donated to Ryan by his father a year
ago. The donation is-
a. void, because Ryan does not own the property considering that the
donation made to him by his fatheris void
b. void, because Ryan, the donor is minor and mentally defective
c. valid, although unenforceable
d. valid, although rescissible because the donor is not capacitated to

donate property
Answer: D
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.
Answer: A
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 stock issued by a domestic corporation
c. obligations 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
Answer: D
22. Given the following statements:
I.A donation by a nonresident alien of shares of stocks issued by a domestic

corporation is subject to donor’s tax if such shares have acquired business
situs in the Philippines
II.A donation by a resident alien of shares of stocks of a foreign corporation

will only be subject to donor’s tax if atleast 85%of the business of such
corporation is located in the Philippines
III.A donation by a nonresident of bonds issued by a foreign corporation is

subject to donor’s tax if 90% of the business of such foreign corporation is
situated in the Philippines
1V.A donation by a nonresident citizen of a franchise will be subject to

donor’s tax in the Philippines even if such intangible is being used outside
the Philippines
Which of the above statements is/are correct?
a. I and II c. III and IV
b. II and IV d. I and IV
Answer: C
B. COMPUTATION OF DONOR’S TAX
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
Answer: D
24. One of the following exemptions cannot be claimed by a nonresident alien

donor
a. 10,000 on dowries or gifts given on account of marriage of a

legitimate son
b. donation to the national government, its agencies or

instrumentalities or political subdivisions thereof
c. donation to a non-profit educational institution not more than 30% of

the gift is used for administration purposes
d. the donation of P10,000 on the tax table
Answer: A
Statement 1: A donation by husband and wife jointly of a conjugal [property

will require two separate computations of donor’s tax which will contained in
two separate donor’s tax return.
Statement 2: if a 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 donor’s tax return.
Statement 3: If the property donated is a community property of the spouses,

each of them is considered as a donor of his share in the co-owned property
and shall be liable for whatever tax that may occur on such donation.
Statement 4: As a rule, a donation inter vivos between spouses during the

marriage is voidable.
Choose the best answer:
a. Statements 1 and 4 are true c. Statements 1,2 and 3 are

true
b. Statements 1 and 2 are true d. Statements 2 and 3 are true
Answer: C
Statement 1: if the marriage is not validly solemnized, the donor is not

entitled to P 10,000 exemption because the donation proter nuptias is not also
valid.
Statement 2: Donations proter nuptias 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 .
Statement 3: A qwedding ceremony which was solemnized by the Mayor is not

valid because he is not authorised to solemnized marriages under the Family
Code, thus the P10,000 exemption from gross gift cannot be claimed by the
donor of a donation proter nuptias.
Statement 4: Ther is no P10,000 exemption from gross gift on a donation

proter nuptias given by a parent to his daughter who will celebrate her 50th
wedding anniversary.
a. Statement 1 is true c. Statement 2 and 3 are false
b. Statement 2 is false d. Statement 1 and 2 are true
Answer: C
27. Justine donated cash to his son an account of marriage on October, 2007 as
follow:
January 15, 2008 - P 25,000
March 10, 2008 - 20,000
July 15, 2008 - 50,000
September 10, 2008 - 100,000
The donors tax due on September 10, 2008 donation is
a. p 780 c. P 1380
b. 1,700 d. exempt
Answer: B
28. Which of the following donations result to net gift of P80,000?
A. Alakdan donation property to Balbakwa with a market value of P

140,000. The4 property is subjet to a mortgage indebtedness
of 60,000 which has paid by the donor at the time of the
donation.
b. The amount of P100,000 and in return, the personal property of

Altura valued at P180,000 will be donated to Busina.
C. The daughter of Ananias was married to her boyfriend. As a gift,

Ananias 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.
Answer: B
29. The following does not result to a gross gift.
a. Donation to the Development Academy of the Philippines.

b. Donation to a parcel of land to brother, the donation is in a
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.
Answer: B
30. All of the following, except one, are exempt from donor’s tax.
a. Donation to the National Philippine Red Cross.
b. Donation to the Development Academy of the Philippines.
c. Donation directly given to the victims of the eruption of Mt. Mayon.
d. Donation to the City of Davao for public purpose.
Answer: C
31. There is reciprocity, when the donor and the donated property
DONOR PROPERTY
A. Nonresident alien intangibles
b. Nonresident citizen immovable
c. Nonresident alien tangible personal
d. Resident alien any kind of property
Answer: A
Numbers 32 to 34 are based on the following information
Annie donated the following properties:
Land in Los Angeles. California. U.S.A - P250,000
Land and building in Jolo Sulu - 175,000
Car registered in the State of California,u.S.A - 225,000
Jewelries in the Philippines - 45,000
Shares of stock in a corporation based in U.S.A - 60,000

Accounts recievables, debtor in the Philippines - 25,000
32. If Annie is a resident citizen, the gross gift is?
a. P780,000 c. P245,000
b. 295,000 d. 220,000
Answer: A
Land, California P250,000
Land and building, Sulu 175,000
Car, California 225,000
Jewelleries, Philippines 45,000
Share of stocks, USA 60,000
Accounts receivable, Phils. 25,000
Gross gift 780,000
33. The gross gift of Annie if she is a non-resident alien without reciprocity
is
a. P780,000 c. P245,000
b. 295,000 d. 220,000
Answer: C
Land and building, Sulu P175,000
Account recievable, Phils. 25,000
Gross Gift P245,000
34. The gross gift if Annie is a non-resident alien with reciprocity is

a. P780,000 c. P245,000
b. 295,000 d. 220,000
Answer: D
Land and building, Sulu P175,000
Gross gift P220,000
35. Butch made a donation to hid children in 2007. In which of the following
successive donations will Butch pay donor’s 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.
Answer: C
Net gift, May 15 P50,000
Add: Net gift- January 15 (40,000-10,000) 30,000
March 15
Total net gifts:
Tax on P100,000 exempt
25.000 * 2% P 500
Gift tax 500
Donations on January 15 and March 15 are not subject to tax because they do
not exceed the P100,000 exemption in the table.
36. Which of the following is false?
a. Donor’s tax applies also to juridical person
b. For purposes on 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.
Answer: C
37. Which of the following is not a principal factor in the determination of

taxable gifts?
a. Identification of transfer included in gross gift.
b. Application of exempt transfers.
c. Subtraction of allowed deduction.
d. Multiplying the net gift by the applicable rates.
Answer: D
Statement I: The donor’s tax payable on the present donation

includes the previous donation made during the
current year.
Statement II: It is not proper to add the prior net gifts during
the current year because the taxes paid on this
donation will be credited
form the donor’s tax computed.
Statement III: The tax rates in tax table for donor’s tax are
relatively lower than the tax rates in the tax
table for estate tax.
Statement IV: The highest tax rate on donor’s tax is higher than
the highest tax rate on estate tax.
a. Statement 1 and 2 are false.
b. Statement 1, 2 and 4 are false
c. Statement 3 and 4 are correct
d. Statement 2 are false.
Answer: B
39. Mr. and Mrs. Abubot donated the following community properties to their
children on May 30, 2006:
Amount Donee
P125,000 Baron For graduation Cum Laude in La Consolacion

College of Bacolod, Bacolod
City.
200,000 Caricot On account marriage celebrated April 30 2005.
? Dakila For placing 3rd in the May, 2006 Cpa Board

Examinations.
If the donor’s tax payable by Mr. Abubot is P10,500 the amount of

the donation given by the spouse to Dakila is-
a. P250,000 c. P500,00
b. 490,000 d. cannot be determined
Answer: C
Let X = Over P200,000 of nat gift
4% = Rate of tax on over P200,000
4%* 2,000= 10,500
4%*=10,500 – 2,000
*=8,500/4%
*=212,500
Excess over P212,500
First 200,000
Net gift 412,500
Let X= share of Mr. abubot on the donation of community property
2X= total donation by spouse.
(125,000 + 200,000)1/2 + x = 412,500
65,000 + 100,000 + x = 412, 500
X = 412,500 – 162,500
X = 250,000
2x = 500,000
40. A stranger in donor’s taxation
a. great grandchild c. child by natural adoption
b. nephew d. grand auntie
Answer: C
41. Sayers, who is single, gave an outright gift of P150,000 to friend,

Johnson, who needed the money to pay medical expenses-
a. the donation is not taxable because the gift is outright.
b. the donor’s tax payable is P1000.
c. the donor’s tas is P45,000
d. the donation is deductible from the gross income of Sayers.
Answer: C
Gross gift 150,000
Rate of tax(stanger) 30%
Donor’s tax 45,000
Statement I: For purposes of donor’s tax, a relative done must

always be a blood relative; otherwise he is a
stranger to the donor.
Statement II: Donation by a stockholder to his wholly owned

corporation is subject to donor’s tax computed
based on the tax table.
Statement III: For purpose of donor’s tax, first cousins who have
never met together personally because the donor
is in the Philippines, while the done grow up in the
United States are stranger to each other.
Statement IV: For donor’s tax purposes, the brother of the

daughter of the donor’s 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
Answer: B
43.Magulang gave gifts to the following persins on his 75th 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 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 the 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 donor’s tax due on the above donations?
a. 720,000 c. 45,000
b. 100,000 d. 1,000
Answer: C
Gross gift (50,000 x 3) 150,000
Rate of tax (stranger) 30%
Gift tax 45,000
44.Relativo donated P500,000 to Heredero Corporation. The donor owns 80% of

the outstanding capital stock of the donee-corporation. The donor’s tax doe on
the donation is-
a. 14,000 c.40,000
b. 150,000 d. none
Answer: B
Net gift 500,000

Rate if tax (stranger) 30%
Gift tax due 150,000
45. When Alcala’s son, Biscocho, was married to his childhood sweetheart,
Calalang, Alcala gave as wedding gift a residential house worth P1,500,0OO to
his son, and a brand new car to Calalang with a value of P700,000. At the time
of the donation, the residential house was mortgaged with Metrobank for
P200,000 which was assumed by Biscocho. The donor’s tax payable by Alcala on
the above donations is-
a. 93,200 c. 109,200
b. 92,600 d. 277,200
Answer: D
To Biscocho
Gross gift 1,500,000
Less: Mortgaged assumed by done 200,000
On account of marriage 10,000 210,000
Net gift 1,290,000
Tax on 1,000,000 44,000
290,000 x 8% 23,200
Gift tax due 67,200
To Calalang
Net gift 700,000
Gift tax due 210,000
Gift tax due on Biscocho 67,200
Gift tax due on Calalang 210,000
Total donor’s tax payable 277,200
Questions 46 to 47 are based on the following information:

Dimanganti, single, donated the following properties on September 21,
2007:
Value Property Donee
100,000 Cash Dimalupig , brother, on account of
marriage.
200,000 Jewelries Trexy, girlfriend residing in Japan
1,500,000 House&Lot Prents, silver wedding anniversary

gift.
20,000 Cash PICPA
75,000 Lot Bgy. Matinios , for use as site of

barangay hall
300,000 Car Ugang, brother, Donation is

revocable
50,000 Cash International Rice Research

Institute
100,000 Cash Matatag, Father of the father of

his mother
70,000 Motorcycle Nico, niece, donation is embodied

in the will
46.The donor’s tax due on the donation to stranger is-
a. 103,500 c. 157,200
b. 724,000 d. 66,000
Answer: D
Trexy, girlfriend P 200,000
PICPA 20,000
Barangay Matinios 75,000
International Rice Research Institute 50,000
Gross Gift 345,000
Less: Exemptions
Barangay Matinios P 75,000
IRRI 50,000 125,000
Net Gift 220,000

Rate of tax 30%
Donor’s tax due 66,000
47. The donor’s tax due on the September 21, 2007 donation is-
a. P 66,000 c. P 166,000
b. 100,000 d. 157,200
Answer: C
To Dimalupig P 100,000
Parents 1,500,000
Matatag 100,000
Net Gift 1,700,000
Tax on P 1,000,000 44,000
700,000 x 8% 56,000
On donations to relatives 100,000
On donation to strangers 66,000
Total tax due 166,000
Revocable donations and those that are embodied in the will are
subject to estate tax.
Numbers 48 to 51 are based on the following information:
Spouses Santos gave the following donations –
4/16/2007 - To Tado, brother of Mr. Santos on account of

marriage cash worth P 300,000
11/2/2007 - Additional donation to Tado, P 200,000
1/15/2008 - Property worth P 400,000 to Lala, daughter.
48. The gift tax due on Mr. Santos on April 16, 2007 is –
a. P 6,000 c. P 1,000
b. 800 d. Exempt
Answer: C
Net gift (300,000 x ½ ) 150,000
Tax on P100,000 Exempt
50,000 x 2% 1,000
49. The donor’s tax payable by Mr. Santos on November 2, 2007 is –
a. P 3,000 c. Exepmt
b. 4,000 d. P 3,200
Answer: A
Net gift (200,000 x ½ ) 100,000
Add: net gift April 16 (300,000 x ½ ) 150,000
Total net gifts 250,000
Tax on P200,000 2,000
50,000 x 4% 2,000
Tax on total 4,000
Less: Tax paid, April 16 1,000
Donor’s tax payable 3,000
50. The gift tax payable by Mr. Santos on January 15, 2008 is –
a. P 2,000 c. P 1,000
b. 10,000 d. None
Answer: C
Net gift (400,000 x ½) 200,000
Tax on P200,000 1,000
The cumulative system of computing the donor’s tax applies only on

donations made in the same year.
51. The donor’s tax due on Mrs. Santos on November 2 is –

a. P 3,000 c. P 30,000
b. Exempt d. 27,000
Answer: C
Net gift (200,000 x ½) 100,000
Numbers 52 to 54 are based on the following information:
52. Wright, an American citizen residing in New York, U.S.A. donated the
following properties:
January 18 - To Mang Doming, his Filipino friend in New York City

property situated in the Philippines worth P 80,000.
February 20 - To his legitimate daughter, Simmang, a resident of the

Philippines, an account of her marriage to a Filipino
boyfriend, a resthouse in Quezon Province valued at P
1,600,000 but with a cost of P 1,200,000.
- To an accredited non-government organization, 200 square

meters of land valued at P 250 per square meter.
August 5 - To his brother, Diony, a naturalized Filipino citizen,

residing in Iloilo City, car worth p 600,000.
On the January 18 donation-
a. No tax is to be paid because the donor is a non-resident alien.
b. No tax liability because the donation is P 80,000 and under the donor’s tax
table, the first P 100,000 of the net gift is exempt from tax.
c. The donor’s tax payable is P 24,000.
d. No tax is to be paid because both the donor and the done are non-resident
of the Philippines.
Answer: C
Net gift P 80,000
Rate of tax 30%
53. The donor’s tax due on the February 20 donation is –

a. P 91,200 c. Not taxable
b. 98,400 d. P 92,000
Answer: D
To Simmang 1,600,000
To accredited NGO (250 x 200) 50,000
Gross gift 1,650,000
Less: Exemption – NGO 50,000
Net Gift 1,600,000
Tax on P1,000,000 44,000
600,000 x 8% 48,000
No cumulative computation will be applied if the previous done is

stranger to the donor.
54. The donor’s tax payable on the August 5 donation is –
a. Exepmt c. P 48,000
b. P 22,000 d. 4,000
Answer: C
Net gift 600,000
Add: Net gift, February 20 1,600,000
Total net gifts 2,200,000
Tax on P1,000,000 44,000
1,200,000 x 8% 96,000
Less: Tax paid, February 20 92,000
55. The following donations were made by a domestic corporation during the
year.
To the Department of Social Welfare P 500,000
To another domestic corporation 500,000
The donor’s tax due in the above donation is –
a. P 14,000 c. P 150,000
b. 44,000 d. 300,000
Answer: C
To domestic corporation 500,000
Numbers 56 to 59 are based on the following information;
56. Cosa, widower, gave the following donations during the year:
March 4 - To his daughter, Danda, an account of marriage to be

celebrated in five (5) months, P 200,000.
April 4 - To his housemaid, Etang, an account of marriage to his

driver, Fandong, P 25,000.
May 4 - To his son, Gato, for passing the CPA Licensure

Examinations, P 120,000.
- To Jango, for winning gold medal in billiard in the Asian

Games held in Busan, South Korea, P 50,000.
June 4 - to his bodyguard, Hule, on account of marriage to his

private secretary, P 30,000.
The donor’s tax due on the March 4 donation is –
a. P 2,000 c. Exempt
b. 1,800 d. P 200,000
Answer: B
Gross gift 200,000
Less: Exemption 10,000
Net gift 190,000

90,000 x 2% P 1,800
57. The donor’s tax due on the April 4 donation is –
a. P 1,800 c. Exempt
b. 7,500 d. P 2,600
Answer: B
Net gift 25,000
Rate of tax 30%
58. The donor’s tax payable on May 4 donation is –
a. P 5,600 c. P 400
b. 6,400 d. 4,600
Answer: D
To Gato 120,000
Jango 50,000
Gross gift 170,000
Less: Exemption 50,000
Net gift 120,000
Add: Net gift, March 4 190,000
Total 310,000
Tax on P200,000 2,000
110,000 x 4% 4,400
Tax on total 6,400
Less: Tax paid, March 4 1,800
Donation of prizes and awards to athletes for winning in a local and /

or international sports competition is tax exempt.
59. The donor’s tax on the June 4 donation is –
a. P 9,000 c. P 1,200
b. 3,000 d. Exempt
Answer: A
Gross gift 30,000
Rate of tax 30%
Donor’s tax 9,000
60. In 2006, Otelo gave a cash of P 80,000 as a birthday gift to his son,
John. Otelo has not given any other gifts or donation in 2006 but made a
donation to his daughter in the same amount in 2007 based on the above
information in 2006, Otelo is
a. Liable to pay donor’s tax.
b. Liable to pay donee’s tax.
c. Exempted from paying donor’s tax.
d. Exempted from paying donee’s tax.
Answer: C
61. Ara gave her pareants a Christmas gift of P 150,000 and made a donation of
P 70,000 to her parish church. She also donated two (2) parcels of land, one
to the City Government of Quezon City and the other fir the construction of a
building to UP Alumni Association, a non-stock, non-profit organization.
Portions of the building shall be leased to generate income for the
association. Which of the following statement is not correct? (RPCPA)
a. The donation of P 70,000 to the Parish Church is exempt from donor’s

tax if not more than 30% of the said donation shall be used by the done
for administration purposes.
b. The donation of a parcel of land to UP Alumni Association is exempt

from donor’s tax because it is made in favour of an educational
institution.
c. The Christmas gift of P 150,000 to Ara’s parent is subject to tax

because it exceeded the P 100,000 exemption from donor’s tax.
d. The donation of a parcel of land to the Government of Quezon City is

exempt form donor’s tax.
Answer: B
62. the following donations were given by Patricia, a resident alien, on

February 18 of the current year:
To the Philippine Government P 500,000
To his son as a wedding gift held 2 months ago 200,000
Birthday gift to a friend 50,000
Wedding gift to his friend’s son 20,000
The aggregate donor’s tax due is –
a. P 22,800 c. P 46,400
b. 4,400 d. 47,000
Answer: A
To the Philippine Government 500,000
To son 200,000
Gross gift 700,000
Less: Exemption/Deduction
To Philippine Government 500,000
To son 10,000 510,000
Net Gift 190,000
On P100,000 Exempt
90,000 x 2% 1,800
To friend 50,000
To friend’s son 20,000
Gross gift/Net gift 70,000
Rate of tax (strangers) 30%
Gift tax 21,000

Aggregate donor’s tax due ( 1,800 + 21,000) 22,800
63. The rule on transfer for inadequate consideration does not apply to
a. Jewelry for personal use c. Vacant lot
b. delivery truck d. Apartment house
Answer: C
The rule on transfer for insufficient consideration does not apply to

transfer of real property considered as a capital asset. A vacant lot is a
real property and at the same time a capital asset.
64. Abarca sold his car to his friend Bengala for P 100,000 when its value was
P 250,000. The property was acquired by Abarca for P 450,000 in 2004. Six (6)
Months after the sale, Abarca died. On that date, the property was valued at
P190,000. The donor’s tax due is –
a. P 1,000 c. P 45,000
b. 1,200 d. None
Answer: C
Fair market value 250,000
Less: Selling price 100,000
Deemed gift 150,000
Rate of tax 30%
Although the seller died six (6) months after the sale, it cannot be
said that the sale was made in contemplation of death. Hence, the sale for
inadequate consideration is subject to donor’s tax.
65. R. Angdata made it apper that he sold his properties to his son on the
following prices:
Residential house for P 100,000
Personal properties for P 50,000
The correct fair market value on the date of sale was P 1,000,000 for
the house, and P 500,000 for the personal properties.
Assuming that you know the facts as a BIR officer, the correct tax
payable on the transaction is –
a. P 12,000 c. None
b. 72,000 d. P 38,000
Answer: B
Fair market value (personal properties) 500,000
Less: Selling price 50,000
Deemed gift 450,000
Tax on P 200,000 2,000
250,000 x 4% 10,000
Fair market value 1,000,000
Rate of tax 6%
Capital gains tax 60,000
Capital gains tax 60,000
Total taxes due 72,000
The rule on transfer for insufficient consideration does not apply on

transfers of real properties which are capital assets. However, the sale is
subject to 6% capital gains tax.
A residential house is a real property-capital asset.
66. When a property is donated, the basis of the donor’s tax is –
a. the cost of acquisition if acquired by purchase, or the fair market

value at acquisition date, whichever is higher.
b. the agreed upon value by the donor and the done
c. the fair market value at the time of the donation
d. any of the above
Answer; C
67. Statement 1: A donated real property cannot be registered in the name of
the done unless the donor’s tax thereon had already been paid.
Statement 2: In case of a deficiency donor’s tax, the donee shall be

required to pay the tax if the property is already in his possession.
a. Only the first statement is true.
b. Only the first statement is false.
c. Both statements are true.
d. Both statements are false.
Answer; A
68. Statement 1: Only one return shall be filed for several gifts
(donations) by a donor to the 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
Answer; C
69. During the year, Mr. And Mrs. Cruz donated P 100,000 in cash from their
conjugal assets to each of their three children. For purposes of paying
donor’s tax, they should file
a. A joint return of the total donation in 2001 at P 300,000.
b. Three joint returns for P 100,000 donation to each child.
c. Two separate returns for P 100,000 by each spouse.
d. Two separate returns for a donation of P 150,000 by each spouse.
Answer; D
70. Donor’s tax return shall be filed within
a. 30 days after the gift has been made.

b. 6 months after the gift from the date of gift.
c. 25 days after giving the gift.
d. 30 dars after the end of every quarter.
Answer: A
71. 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 returns to be filed.
Statement 2: In donor’s tax. No extension of time for filing 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.
Answer: B
In the donor’s tax return, the computation of tax on donation to

stranger and relative is separate. However, the total amount payable shall be
contained in one (1) tax return only.
The provision in the National Internal Revenue Code on extension of time

for filing has been deleted. Therefore, it is clear that extension of time
filing the donor’s tax return is no longer allowed by law.
Statement 1 - The income tax on the donated property after the donation but
registration in the name of the donee shall be a liability of the
done.
Statement 2 - The 30-day period for filing the donor’s tax return and payment
of tax shall commence upon the date of the acceptance even if the
donated property has not yet been delivered to the donee.
Statement 3 - The donor’s tax return shall be filed at the place of residence
of the donor or of the donee, at the option of the donor.
Statement 4 - In case he committed an error in the computation of tax, the

donor shall be required to pay a deficiency tax even if the
property is already in the possession of the donee.
Statement 5 - The donor shall file separate donor’s tax returns for each
donation even if these were made on the same date.
a. Statement 1, 3 and 5 are false.
b. Statement 1 & 2 are false.
c. Statement 2 and 3 are true.
d. Statement 3 and 4 are true.
Answer: A
The income tax on income of a donated property which is not yet

registered in the name of the donee is still payable by the donor.
The place of payment of the donor’s tax return is fixed at the place of
residence of the donor and is not to his will.
There shall only be one donor’s tax return on donation made on the same
date.
73. One of the following is not an attachment to the donor’s tax return.
a. Sworn statement of the relationship of the donor to the donee.
b. Certified true copy of the Certificate of Title of the donated

property
c. Income of the donated property.
d. Proof of claimed deductions.
Answer: C
74. Manalo, a resident of Dagupan City donated to Arturo a property in Laoag

City. The donor’s tax is P 40,000. The deed of donation was signed in the
residence of Arturo in Baguio City. The donor’s tax return must be filled in
a. Dagupan City c. Baguio City
b. Laoag city d. Anywhere in the Philippines
Answer: A
Except in cases where the Commissioner of Internal Revenue otherwise

permits, the donor’s tax shall be filed and the tax paid in the city or
municipality where the donor was domiciled at the time of transfer.
75. In Number 74, assuming the donor’s tax return and the tax was filed in
Baguio City, the amount still due on Manolo is –
a. P 10,000 c. P 40,000
b. 50,000 d. 20,000
Answer; A
Donor’s tax due per return 40,000
Add: Penalty (40,000 x 25%) 10,000
Total 50,000
Less: Amount already paid 40,000
Amount still due 10,000
76. Carina, Filipina, had the following data:
Net gift, Philippines - P 150,000
Net gift, United States - 450,000
Gift tax paid in United States - 7,500
The donor’s tax payable on Carina is –
a. P 20,000 c. P 12,500
b. 1,000 d. 15,000
Answer: C
Net gift, Philippines 150,000
Net gift, United States 450,000
Total net gifts 600,000
Tax on P500,000 14,000
100,000 x 6% 6,000
Less: Tax credit
Tax paid, US 7,500
Limit (45/60 X 20,000) 15,000

Allowed (lower) 7,500
77. Django, resident citizen, made the following donations on May 6 of the
current year:
P 175,000 - To his sister, Diana, property situated in Los Angeles,

California, U.S.A. the donor’s tax paid in U.S. is P 20,000.
225,000 - To Barbara, his girlfriend in the Philippines.
50,000 - To International Rice Research Institute.
The donor’s tax due after tax credit is –
a. P 69,000 c. P 49,000
b. 30,168 d. No tax credit allowed
Answer: C
On donation to a relative:
Net gift P 175,000
75,000 x 2% 1,500
Donor’s tax 1,500
On donation to a stranger:
To Barbara 225,000
To IRRI 50,000
Gross gift 275,000
Less: Exemption- IRRI 50,000
Net gift 225,000
Rate of tax 30%
Donor’s tax on donation to:
Relative 1,500
Stranger 67,000
Total donor’s tax 69,000
Less: Tax credit
Tax paid in U.S.A. 20,000
Limit (175,000/400,000 x 69,000) 30,187
Allowed (lower) 20,000
* Computation of total net gifts
On donation to a relative 175,000
On donation to a stranger 225,000
Total 400,000
78. Which of the following statements is correct?
Statement 1 - In case of gifts made by a non-resident, the return may be filed

with the 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.
Statement 2 - A non-resident citizen donor who donates a property situated

abroad must claim tax credit in order to reduce his donor’s tax
liability even if there is no other donation made on the that
particular date.
a. Statement 2 c. Both Statements
b. Statement 1 d. Neither Statement
Answer: C
79. Jose German, Filipino resident of Germany, donated a real property worth P
800,000 to his homosexual brother, Felipe Espanola. Jose paid a transfer tax
of P 20,000 in Germany.
How much donor’s tax should be paid by Jose German in the Philippines?
a. P 32,000 c. P 12,000
b. 20,000 d. Zero
Answer: C
Tax on P500,000 14,000

300,000 x 6% 18,000
Less: Tax paid in Germany 20,000
Limit (800/800 x 32,000) 32,000
Credit allowed (lower) 20,000
80. How about if the tax paid in Germany was P 40,000?
a. P 32,000 c. P 12,000
b. 20,000 d. Zero
Answer: D
Tax on P500,000 14,000
300,000 x 6% 18,000
Less: Tax paid in Germany 40,000
Limit (800/800 x 32,000) 32,000
Credit allowed (lower) 32,000
Donor’s tax payable 0

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Part 5 Donor S Tax

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Part 4 (Donor’s Tax)

A. Concept of Donation & Donor’s Tax Computation of Gross Gift

1. An act of liberality whereby one disposes gratuitously of a thing or right

2. A tax imposes on the gratuitous transfer of property between two or more

a. estate tax c. income tax

b. gift tax d. transfer tax

a. excise tax c. donee’s tax

b. property tax d. poll tax

4. A donation made by a stockholder to a corporation is subject to a donor’s

a. entity theory c. benefit received principle

b. lifeblood theory d. tax benefit rule

5. What is the implication if a corporation condones the debt of a stockholder

b. The condonation is subject to donor’s tax on the corporation because

c. It is tantamount to a declaration of dividend, therefore it is an

d. it is just a simple case of extinguishment of an obligation which is

Donor’s Tax Income Tax

a. capacity of the donor

b. capacity of the donee

c. delivery of the subject matter of gift

8. A donation of one (1) hectare of timberland.

c. maybe in a private document

d. maybe in a public document

9. One of the following is a valid donation

a. oral donation of a cellular phone worth P4,500

b. oral donation of a passenger jeepney worth P150,000

c. a parcel of land worth P5,000 in a private document

d. a parcel of land worth P500,000 in a private document

10. Which of the following constitutes a taxable gift?

a. creditor’s gratuitous discharge of a debtors obligation

b. one day rent-free use of another’s property

c. a gratuitous transfer by an incompetent

d. an agreement to make a future transfer which is not supported by a

11. Antonio donated shares of stocks of Cayetano Corporation to Barandilla on

a. April 20, 2008 c. June 20, 2008

b. April 25, 2008 d. June 30, 2008

a. December 31, 2006 c. January 7, 2007

b. January 15, 2007 d. May 22, 2008

14. Which of the following examples is not taxable? (RPCPA)

a. A filipino citizen donated a parcel of land located in the United

b. On June 12, 2006, A made a gift of P200,000 to his daughter on

c. Mr.Ramos, a multi-millionare, gives his wife a diamond ring worth

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

15. One of the following is subject to donor’s tax

a. Donation inter vivos to Iglesia Ni Cristo

b. Donation inter vivos to INTERNATIONAL RICE RESEARCH INSTITUTE.

a. spread-out method c. donation of life insurance

b. splitting of gift d. void donation

Statement 2:proceeds of life insurance policy on the life of the decedent

Statement 2: There is no donor’s tax in a donation on account of marriage if

a. only the first statement is wrong

b. only the second statement is wrong

c. both statements are wrong

d. both statements are correct

b. void, because Ryan, the donor is minor and mentally defective

c. valid, although unenforceable

d. valid, although rescissible because the donor is not capacitated to

a. will include all intangible personal properties regardless of

b. will include all intangible personal properties situated in the

c. with reciprocity will not include all intangible personal properties

d. without reciprocity will not include all intangible personal

21. Which of the following is not considered as an intangible personal

a. franchise which must be exercised in the Philippines

b. shares of stock issued by a domestic corporation