TAXATION

GARCIA/ CO/ WONG

TAX 2-DONOR’S TAX

A. Donation
1. Definition
Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it.

2. Classification of Donations
a. From viewpoint of motive, purpose or cause
1) Simple—the cause is pure liberality
2) Remuneratory—due to past services rendered or future services or charges and burdens
3) Onerous—burdens and charges equal to the value of the thing donated
4) Modal—consideration is less than the value of the thing donated

b. Time of taking effect

1) Donation inter vivos – one made between living persons, and which is perfected from the time the donor knows of the acceptance of the done.
It is subject to donor’s tax.
2) Donation mortis causa –one which takes effect upon the death of the donor and, therefore partakes of the nature of a testamentary disposition.
It is subject to estate tax.

3. Formal Requisites of a Donation

a) Personal/Movable properties – may be made orally or in writing
 An oral donation requires simultaneous delivery of the thing or of the document representing the donated interest.
 A donation in writing does not require simultaneous delivery of the thing.
 If the value of the donated personal property exceeds P5,000, the donation and acceptance must be made in writing.
If the value of the donated personal property does not exceed P5,000, the donation may be oral and in writing and the acceptance may be oral,
in writing or tacit.

b) Real/Immovable properties – It must be in writing and in public instrument (notarized).

 The acceptance may be made in the same instrument (deed of donation) or in a separate public instrument.
 If the acceptance is made in a separate instrument, the donor shall be notified in authentic form.

4. Essentials of a Taxable Gift

a) Capacity of the donor
b) Donative intent
c) A donee who shall accept the gift (acceptance of the gift)
d) Delivery of the gift

5. Completed Gift
a) Gift perfected and completed – it is perfected from the moment the donor knows of the acceptance of the done and it is completed by delivery to
the donee either actually or constructively of the donated property.
b) A gift that is incomplete because of reserved powers becomes complete when either,
1) the donor renounces the reserved power
2) the right to exercise the reserved power ceased because of the happening of some event or contingency or the fulfilment of some condition, other
than because of the donor’s death.
c) The donor’s tax shall not apply unless and until there is a completed gift.

6. Qualified Donors
All persons who may contract and dispose of their property may make a donation (Art. 735, Civil Code).

7. Qualified Donees
a. All those who are not specially disqualified by law therefor may accept donations (Art. 738, Civil Code).
b. Minors and others who cannot enter into a contract may become donees but acceptance shall be done through their parents or legal
representatives (Art. 741, Civil Code).
c. Donations made to conceived and unborn children may be accepted by those persons who would legally represent them if they were already
born (Art. 742, Civil Code).

B. Donor’s Tax
1. Definition of Donor’s Tax
Is a tax levied, assessed, collected and paid upon the transfer by any person, resident or non resident, of the property by gift.

2. Purpose/Objective of donor’s tax

a. To prevent avoidance of estate tax.
b. To compensate for loss income tax when large estate are split by donation.

3. Requisites
a. There is a gratuitous transfer of property.
b. The donor and the done are both living at the time of the transfer.

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C. Format of Computation (BIR Form 1800)
1. Old Law
Stranger Relative
Total (gross) gifts Pxxx Pxxx
Less: Deductions (Exemptions) (xxx) (xxx)
Total net gifts in this return Pxxx Pxxx
Add: Total prior net gifts during the calendar year xxx xxx
Total net gifts subject to tax Pxxx Pxxx
Tax due Pxxx Pxxx
Total tax due Pxxx
Less: Tax credits/payments
Payments for prior gifts (xxx)
Foreign donor’s tax pad (xxx)
Tax paid in return previously filed, if this is an amended return
Tax payable (overpayment) Pxxx/(xxx)

2. TRAIN Law
Total (gross) gifts Pxxx
Less: Deductions (Exemptions) (xxx)
Total net gifts in this return Pxxx
Add: Total prior net gifts during the calendar year xxx
Total net gifts to date Pxxx
Less: Exempt gift P250,000
Total net gifts subject to tax
Tax due ( @ 6% ) Pxxx
Less: Tax credits/payments
Payments for prior gifts (xxx)
Foreign donor’s tax pad (xxx)
Tax paid in return previously filed, if this is an amended return
Tax payable (overpayment) Pxxx/(xxx)

D. Donor Tax Rates

1. Old Law
a. For Relatives:
If the net gift is:
Over But not over The tax shall be Plus Of excess over
P 100,000 Exempt
P 100,000 200,000 P 0 2% P 100,000
200,000 500,000 2,000 4% 200,000
500,000 1,000,000 14,000 6% 500,000
1,000,000 3,000,000 44,000 8% 1,000,000
3,000,000 5,000,000 204,000 10% 3,000,000
5,000,000 10,000,000 404,000 12% 5,000,000
10,000,000 1,004,000 15% 10,000,000

b. For Strangers:
The donor’s tax rate is 30%.

2. TRAIN Law
The total tax for each calendar year shall be 6% (six percent) computed on the basis of the total gifts in excess of two hundred fifty thousand
pesos (P250,000) exempt gift made during the calendar year.

3. (Old Law) Who are considered as relatives?

A
B C
D E F
G H I J
K L M N O
P Q R S T U
V W X Y Z aa bb

K Donor

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G,D,B and A Ascendants (Direct Line)
P, Q, V, W and X Descendants (Direct Line)
L Brother or Sister (Collateral Line)
R Nephew or Niece (Collateral Line)
Y Grandnephew or Grandniece (Collateral Line)
H Uncle or Aunt (Collateral Line)
M First cousin (Collateral Line)
E Granduncle or Grandaunt (Collateral Line)

4. Who are not within the fourth degree of relationship?

S,Z
I, N,T, aa,
C, F, J, O, U, bb
They are your relatives by consanguinity (blood) in the collateral line, but are considered strangers for donor’s tax purposes because they are
beyond the fourth degree of relationship.

E. Gross Gifts
1. Direct Gift
a. Types of properties Examples
1) Real or immovable property Land, building or similar structures, or improvements, which are fixed more or less permanently on the
ground such as monument.
2) Tangible personal property Equipment, furniture, machines, paintings, jewelry, and similar property.

3) Intangible personal property Receivables or claims against another, bills and coins, bank deposits, shares of stock, bonds or
Rights and claims of the donor certificates of indebtedness, franchise and similar property or rights.

b. Classification of Donor Properties located in the Philippines Properties located in a Foreign Country
Tangible
Intangible personal Tangible personal Intangible personal
Real properties personal Real properties
properties properties properties
properties
Resident Citizen / / / / / /
Non-Resident Citizen / / / / / /
Resident Alien / / / / / /
Non-Resident Alien / / /** X X X

c. Rule of reciprocity (Non-resident Alien)**

1) Properties covered by reciprocity - Intangible personal property situated in the Philippines owned by non-resident alien donor.
Reciprocity can take place when the foreign country where the non-resident alien was a citizen and resident:
- Does not have any kind of donor’s taxes
- Has donor’s tax but allows exemption to non-resident Filipinos

2) Basic Rules
When there is reciprocity - The intangible personal property of non-resident alien situated in the Philippines are not included in the gross gift
When there is no reciprocity - The intangible personal property of non-resident alien situated in the Philippines are included in the gross gift

3) Intangible properties considered situated in the Philippines

The following shall be considered as situated in the Philippines (among others):

a) Franchise which must be exercised in the Philippines;

b) Shares, obligations or bonds issued by any corporation or sociedad anonima organized and constituted in the Philippines in accordance with its
law;
c) Shares, obligations or bonds issued by any foreign corporation 85% of the business of which is located in the Philippines;
d) Shares, obligations or bonds issued by any foreign corporation if such shares, obligations or bonds have acquired a business situs in the
Philippines;
e) Shares or rights in any partnership, business or industry established in the Philippines.

2. Indirect Gifts
a. Transfer for Less Than Adequate and Full Consideration
 Rule: Where a property, other than a real property subject to capital gain tax, is transferred for less than an adequate and full consideration
in money’s worth, then the amount by which the fair market value of the property exceeded the value of the consideration shall, for the
purpose of donor’s tax, be deemed a gift, and shall be included in computing the amount of gifts made during the calendar year.

Ordinary Assets Capital Assets

Personal Property Real Property Personal Property Real Property
DT DT DT CGT

Exceptions:

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1) Real properties classified as capital assets transferred for less than adequate and full consideration (Capital Gains Tax)
2) Where the owner was compelled to sell his property to minimize his losses.
3) A sale, exchange or other transfer of property made in the ordinary course of trade or business ( a transaction which is a bona fide,
arm’s length and free from any donative intent) will be considered as made for an adequate and full consideration in money or
money’s worth. (TRAIN Law)

Exercise:
Determine if the transfer of property is subject to donor’s tax otherwise indicate what applicable tax appli es.
FMV of Consideration Applicable Tax
Property Received
Transactions Transferred
1. Computer equipment used in business and transferred to his cousin. P 30,000 P 40,000
2. Computer equipment for personal use and transferred to his cousin P 50,000 P 40,000
3. Building for rent, sold to his best friend. P 25,000,000 P 23,000,000
4. Building for rent, sold to his uncle. P 25,000,000 P 30,000,000
5. House and lot sold to his sister. P 5,000,000 P 3,000,000
6. Car for his personal use. P 5,000,000 P 3,000,000
7. Car used in business. P 400,000 P 300,000

b. Forgiveness of Debt
Cancellation and forgiveness of may result into payment of income tax or donor’s tax.

Norma/Regular Income tax - when the debtor performs services for the creditor, who in return cancels the debt of the debtor. The debtor is
subject to income tax.
Donor’s tax – when the creditor without any consideration received from the debtor cancels the debt of the debtor. The creditor is liable to donor’s
tax.
Final Withholding Tax on Passive Income – When a corporation forgives the debt of a stockholder. It results to a payment of dividends subject to
final withholding tax on passive income.

3. Renunciation by Heir of Inheritance

Rules:
a. Hereditary Estate
1) General renunciation (in favor of all heirs) by an heir of his share in the hereditary estate in favor of all the heirs – not subject to donor’s
tax.
2) Specific renunciation (in favor of one or more of the heirs but not all heirs) by an heir of his share in the hereditary estate in favor of one
or more of the heirs - subject to donor’s tax

b) Share in the in the conjugal or absolute community

General or specific renunciation by the surviving spouse of his or her share in the in the conjugal or absolute community after the
dissolution of the estate in favor of the heirs of the deceased or any other person – subject to donor’s tax

4. Gifts Through creation of a Trust

5. Others
a. Donation made by a corporation to the heirs of a deceased officer out of gratitude for his past services.
b. Transfers of a property to a trust in consideration of marriage. (Commissioner V. Wemyss (324 U.S. 303, 1945).

F. Valuation of Gifts Made in Property

1. If the gift is made in property, the fair market value of the property at the time of the gift shall be considered the amount of the gift.
2. In case of real property, the provisions in estate tax shall apply to the valuation of said real property.

G. Exemption of Certain Gifts/Deductions from Gross Gift

Old Law TRAIN LAW
Exemption or deduction RC/NRC/RA NRA RC/NRC/RA NRA
Dowry (is no longer an allowable deduction under the TRAIN Law)    

Gifts to the government    

Gifts to educational, charitable, religious, etc.    

Encumbrances on gift assumed by donee.    

Diminution of gift provided by donor    

Diminution of gift – refers to the decrease in the value of property donated as a result of a
condition made by the donor to the donee.

1. Found in the Tax Code

a. Dowries or gifts made on account of marriage(is no longer an allowable deduction under the TRAIN Law)

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Requisites:
1) Gift made on account of marriage;
2) Given before its celebration or within 1 year thereafter;
3) Given to legitimate, recognized natural or adopted children;
4) Amount of exemption is P10,000 per donor per child.

b. Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or
to any political subdivision of the said Government.

c. Gifts in favor of an educational and/or charitable , religious, cultural or social welfare, corporation, institution, accredited non-
government organization, trust or philanthropic organization or research institution or organization
Requisites:
1) not more than 30% of said gift shall be used by such donee for administration purposes.

Note:
A Non-stock educational and/or charitable corporation, institution, accredited non-government organization, etc. is a school, college or
university and/or charitable corporation, accredited non-government organization etc.:
a. Incorporated as non stock entity
b. Paying no dividends
c. Governed by trustees who receive no compensation and
d. Devoting all its income to the accomplishment and promotion of the purpose enumerated in its Articles of Incorporation

2. Other Deductions
a. Encumbrance on the property donated if assumed by the done
b. Those specifically provided by the donor as diminution from the property donated

3. Exempt Donations Under Special Laws

Donation to:
a. International Rice Research Institute (IRRI)
b. Philippine American Cultural Foundation
c. Ramon Magsaysay Award Foundation
d. Philippine Inventors Commission
e. Integrated Bar of the Philippines (IBP)
f. Development Academy of the Philippines (DAP)
g. National Social Action Council
h. Department of Southeast Asian Fisheries Development Center of the Philippines
i. National Museum
j. National Library
k. Archives of the National Historical Institute
l. Museum of Philippine Costumes
m. Intramuros Administration
n. Gifts and donation to the University of the Philippines (R.A. 9500).
o. Contributions to the National Book Trust Fund (R.A.9521).
p. Donation to qualified foster care agencies (R.A. 10165).
q. Any contribution in cash or in kind to any candidate, political party, or coalition of parties for campaign purposes, shall be exempt from
donors tax (RA No. 7166)

(RMC 30-2016) Any contribution in cash or in kind to any candidate or political party or coalition of parties for campaign purposes, duly
reported to the Commission shall not be subject to the payment of any gift tax. Only those donations/contributions that have been
utilized/spent “during” the campaign period as set by the COMELEC are exempt from donor’s tax. Donations utilized before or after the
campaign period are subject to donor’s tax.

Note: Exempt Gifts

Exemptions are not to be treated as exclusion from the gross gifts of the donor. They partake the nature
of deductions and are, therefore, deductible from the gross gifts in order to arrive at taxable net gifts.
Hence, same amount shall likewise be presented in the gross gifts of the donor.

Exercise:
1. Determine the gross gift and the deduction from each of the following transactions below.
Transactions Gross gift Deduction
1. Land donated, cost P1,000,000; fair market value P1,500,000. It had an unpaid mortgage of P300,000.
2. Land donated, cost P1,000,000; zonal value P1,500,000. It had an unpaid mortgage of P300,000. The
unpaid mortgage will be assumed by the donee.
3. House and lot donated valued at P1,200,000 with unpaid real estate tax of P50,000. The unpaid real
estate tax will be assumed by the donor.
4. Real property used as parking space of the factory sold for P3,000,000; assessed value P3,500,000; fair
market Value P4,000,000.
5. Cash donated to his friend, P1,000,000, the donor provided that P300,000 will be given to an
accredited NGO.
6.Vehicle donated to Philippine Orthopedic Center valued at P1,500,000.

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H. Void Donations/Gifts
1. Under Art. 739 of the new civil code, the following donations shall be void:
a. Those made between persons who were guilty of adultery or concubinage at the time of the donation.
b. Those made between persons found guilty of the same criminal offense, in consideration thereof.
c. Those made to a public officer or his wife, descendants and ascendants, by reason of his office.

In the case referred to in No.1. a., the action for declaration of nullity may be brought by the spouse of the donor or donee, and the guilt of the
donor and donee may be proved by preponderance of evidence in the same action.

2. Under Art. 87 of the new family code:

a. Every donation between the spouses, whether direct or indirect during the marriage shall be void.

Exceptions:
1) Moderate gifts, which the spouse may give each other on the occasion of any family rejoicing.
2) Donation mortis causa.

b. Between persons living together as husband and wife without a valid marriage.

3. Donations made to persons who are incapable of succeeding:

a. The priest who heard the confession of the testator during his last illness, or the minister of the gospel who extended spiritual aid to him during
the same period;
b. The relatives of such priest or minister of the gospel within the fourth degree, the church, order, chapter, community, organization, or institution
to which such priest or minister may belong;
c. A guardian with respect to testamentary dispositions given by a ward in his favor before the final accounts of the guardianship have been
approved, even if the testator should die after the approval thereof; nevertheless, any provision made by the ward in favor of the guardian when
the latter is his ascendant, descendant, brother, sister, or spouse, shall be valid;
d. Any attesting witness to the execution of a will, the spouse, parents, or children, or any one claiming under such witness, spouse, parents, or
children;
e. Any physician, surgeon, nurse, health officer or druggist who took care of the testator during his last illness;
f. Individuals, associations and corporations not permitted by law to inherit.

The following are incapable of succeeding by reason of unworthiness:

g. Parents who have abandoned their children or induced their daughters to lead a corrupt or immoral life, or attempted against their virtue;
h. Any person who has been convicted of an attempt against the life of the testator, his or her spouse, descendants, or ascendants;
i. Any person who has accused the testator of a crime for which the law prescribes imprisonment for six years or more, if the accusation has been
found groundless;
j. Any heir of full age who, having knowledge of the violent death of the testator, should fail to report it to an officer of the law within a month,
unless the authorities have already taken action; this prohibition shall not apply to cases wherein, according to law, there is no obligation to make
an accusation;
k. Any person convicted of adultery or concubinage with the spouse of the testator;
l. Any person who by fraud, violence, intimidation, or undue influence should cause the testator to make a will or to change one already made;
m. Any person who by the same means prevents another from making a will, or from revoking one already made, or who supplants, conceals, or
alters the latter's will;
n. Any person who falsifies or forges a supposed will of the decedent. (756, 673, 674a)

I. Donation of a Common Property

1. 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.

2. If what was donated is a conjugal or community property and only the husband signed the deed of donation, there is only 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 Code of the Philippines and the Family Code of the Philippines.

J. Donations made by a Foreign Corporation

Donation of a foreign corporation of its own shares of stock in favor of a resident employee is not subject to donor’s tax (BIR Ruling No. 18-87,
January 26, 1987). Because it should be assumed that such were given to the resident employee in consideration of his services to the
corporation. Likewise, the same shall constitute taxable compensation to the recipient.

K. Splitting of Gift
1. A tax minimization scheme which is done by spreading the gift over numerous calendar years to avail of lower tax liability.
2. This scheme is legally permissible, means to reduce or escape totally from a possible tax liability.
3. The splitting method is applicable if the donor makes two or more donations during different calendar years. Under the splitting method, since the
donations are made during different calendar years, it is not required to include all donations in the last return.

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L. Computation of Taxable Net Gift and the Donors Tax Due
1. Net gift shall mean the net economic benefit from the transfer that accrues to the donee.
2. The computation of the donor’s tax is on a cumulative basis over a period of one calendar year.
3. Husband and Wife are considered as separate and distinct taxpayers for purposes of donors tax.
4. The tax payable of the donor if the donee is a relative is based on the tabular donor’s tax rate (2% to 15%).
5. The tax payable of the donor if the donee is a stranger is 30% of the net gifts.
6. The donors tax shall not apply unless and until there is a completed gift.
7. The law in force at the time of the completion of the donation shall govern the imposition of donor’s tax.

M. Tax Credit for Donor’s Taxes Paid to a Foreign Country

Resident citizen, non-resident citizen and resident alien can claim donor’s tax credit for donor’s taxes paid to a foreign country.

Amount Deductible:

a. Actual donor’s tax paid abroad Whichever

b. Limit is lower

1. One foreign country

Limit

Net gift, foreign x Philippine donor’s tax due Allowed

Tax credit
Total net gifts (lower
between
Actual actual and

Foreign donor’s tax

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2. Two or more foreign country

Limit (a) - By country Xxx

Allowed Limit
Limit (b) - By total Xxx
(lower between
limit (a) and limit
(b)

Limit (lower between limits a and b) Xxx

Allowed Tax
Credit (lower
Actual total foreign
between actualdonor's taxes Xxx
and allowed limit)
Limit A – Per Foreign Country
Net Gift, per foreign country x Philippine Donor’s Tax Due
World Net Gift

Limit B – By Total
Net Gift all foreign countries
World Net Gift x Philippine Donor’s Tax Due

Exercise:
1. Mr. Toby K. Bug a non-resident citizen donor, made the following donations on Jan 15, 2018:

a. To Josie Ngo, his teacher, a land with zonal value of P2,000,000 and with an unpaid realty tax of P50,000 based on the land’s value per real
property tax declaration of P3,300,000.
b. To Alger, a legally adopted child, who will be married to Kathy Lee on March 31, 2018, a condominium unit in Zamboanga, fair market value,
P2,510,000.
c. To Kenja, girlfriend in Singapore, House and lot with an unpaid mortgage of P300,000 which will be assumed by the donee, fair market value,
P4,300,000,000. (donor’s tax paid in Singapore, P80,000).
d. To the National Social Action Council, computer equipment, P250,000 and to LeAd, chairs, P250,000.

How much is the Philippine donor’s tax payable after the allowable tax credit?

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N. Filing of Return and Payment of Tax
1. Requirement
Any individual who makes any transfer by gift (except those which are exempt from donor’s tax) shall, for the purpose of donor’s tax, make a
return under oath in duplicate

2. Tax Form
BIR Form 1800-Donor’s Tax Return

3. Contents of the donor’s tax return

The return shall set forth:
a. Each gift made during the calendar year which is to be included in computing net gifts
b. The deductions claimed and allowable
c. Any previous net gifts made during the same calendar year
d. The name of the donee and
e. Such other information as may be required by rules and regulations made pursuant to law

4. Time for filing of return and payment of tax

The return shall be filed within 30 days after the date the gift is made. The tax due thereon shall be paid at the time of filing

5. Place of filing of return

a. In case of resident donors:
1. Authorized agent bank
2. Revenue District Officer
3. Revenue Collection Officer
4. Duly authorized Treasurer of the city or municipality where the donor was domiciled at the time of the transfer
b. In case of non-resident donors:
1. Philippine Embassy or Consulate where he is domiciled at the time of the transfer or
2. Office of the Commissioner

6. Notice of donation by a donor engaged in business

The donor engaged in business shall give a notice of donation on every donation worth at least P50,000 to the RDO which has jurisdiction over
his place of business within 30 days after receipt of the qualified donee institution’s duly issued Certificate of Donation, which shall be attached to
the said Notice of Donation, stating that not more than 30% of the said donations/gifts for the taxable year shall be used for administration
purposes.

7. Civil Penalties and Interest

25% surcharge Penalty of 25% if there is no false or fraudulent intent on the taxpayer.
50% surcharge Penalty of 50% if there is false, malice, fraudulent intent on the taxpayer.
20% interest Interest of 20% on the unpaid amount of tax from the date computed until fully paid.

Comprehensive Problems

1. Ms. Maria Isabela Garcia Presbitero, single made the following donations:

February 14, 2015 To her brother, Max, P100,000.

March 1, 2015 To Celine, her sister, P250,000.
September 5, 2015 To her boyfriend, Oway, a brand new car worth P 800,000.
September 8, 2015 To her father, Jay, a house and lot costing P4,000,000, with FMV of P4,800,000 and zonal value of P5,500,000. The
house and lot was mortgaged by Maria Isabela for P700,000 of which she paid P200,000 before giving it to her father.
December 25, 2015 To the Philippine Inventors Commission P50,000.
January 9, 2016 To her mother Cecile, a watch purchased for P P300,000.

a) Compute the donors tax payable of Ms. Maria Isabela Freshviter for the year 2015 and 2016.
b) Assuming all transactions in 2015 happened in 2018 and transaction in 2016 happened in 2019, Compute the donors tax payable of Ms. Maria
Isabela Freshviter for the years 2018 and 2019. (TRAIN Law)

2. The following transactions were made by Mr. and Mrs. Bigay:

January 1, 2015 Gave their legally adopted son and future daughter in law who will be married on March 4, 2016, P15,000.
February 14,2015 Mr. Bigay gave Mrs Bigay a Rolex watch purchased for P750,000 as Valentines gift. Amount is not moderate.
April 9,2015 To the Development Academy of the Philippines (DAP), Land in Tagaytay, value per real property tax declaration,
P600,000; zonal value,P500,000.
May1, 2015 Sold their rest house and car to Mr. Bigay’s sister, P3,000,000 and P300,000 respectively. The rest house had a cost of
P1,000,000 five years ago, a zonal value of P4,000,000 and an assessed value of P3,000,000. The car has a fair market
value of P500,000
August 9,2015 Sold their condominium unit for P3,000,000, fair market value P2,500,000.

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December 25, 2015 Donated a common land to the provincial government of Nueva Vizcaya, Fair market value P600,000. It will be used as
a public playground for Vizcayano children.

Mr. and Mrs Bigay donated chairs to St. Louis School. A school operated by the Diocese of Bayombong, Nueva
Vizcaya. pawn value, P150,000.

Mr and Mrs.Bigay gave the school principal P100,000.

Mr. and Mrs Bigay gave a land to Mrs. Bigay’s brother, fair market value P600,000. This land was mortgage by the
spouses for P300,000 and paid P100,000 before giving it to Mrs. Bigay’s brother. Mr. and Mrs Bigay will assume the
unpaid mortgage.
March 4,2016 Gave their legally adopted son and daughter in law a land with a fair market value of P1,500,000 on account of the
marriage of the two. The land has an unpaid real property tax of PP50,000. This will be assumed by the donees
April 28, 2016 To their daughter who secretly got married last December 25,2015. P500,000.

a) Compute the donor’s tax payable of Mr. and Mrs Bigay for years 2015 and 2016.
b) Assuming all transactions in 2015 happened in 2018 and transaction in 2016 happened in 2019, Compute the donors tax payable of Mr. and Mrs
Bigay for the years 2018 and 2019. (TRAIN Law)

END

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