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Business and

Transfer Taxation:
Donation:
Concepts and
Applications

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Chapter 1
Contract of Donation
Chapter Objectives:
At the end of this chapter learners are expected to demonstrate
the following learnings:

• Remember and understand the requisites regarding the


capacity of the Donor and Donee in the contract of
donation.

• Remember and understand the elements of donation

• Understand and apply concepts of void donations

• Understand and apply the concepts of donation of


movable and immovable properties
Who can be Donors?
All person (natural or juridical) who may contract and
dispose their property may make a donation (art. 735, Civil Code)
Illustration:
Andres Bonifacio, 25 years old, happily married to Oryang,
donated land to Emilio amounting to P2,000, on January 25,
1898. Is the donor can disposed the said property?
Answer: he can dispose his property using donation for he has
qualified under Art. 735. Furthermore, the donor has not been
convicted of crimes that may suspend his rights to donate money
or property.
Who can be Donees?

• All those who are not specially disqualified by


law may accept donations. (art. 738, Civil Code).

• Minors and others who cannot enter into


contract may become donees, but acceptance

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shall be done through their parents or legal
representatives. (art. 741, Civil Code)

• Donation 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)
Illustration:
Jose Rizal, 32 years old, donated a Ferrari sports car to his
conceived son with Josephine Bracken on December 30, 1896.
Josephine accepted the donation in favor of his unborn son. Is
the donation to unborn children are valid?
Answer: the donation to unborn children are valid as long as their
legal representative accepts the said donation. In donation, it
does not matter whether the done capacitated or not, as long as
the acceptance must be made by the capacitated ones.
When is the donation perfected?
At the moment the donor knows of the acceptance of the
gift by the donee. (art. 734, Civil Code)
The moment that the donee and donor has a meeting of minds
the donation is perfected.

Illustration: on December 15, 2019 Jose donates a piece of land


to his friend Andres. On December 25, 2019 Andres signify his
acceptance on Jose’s donation. When was the donation
perfected?
Answer: the donation was perfected on December 25, 2019
when Andres accepts the donation. During that day the elements
of donation was completed. Elements of valid donations are as
follows.
Elements of Donation

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• Donative intent – the donor must have its intent to
donate or give not vitiated with VIMFU

• Capacity of the Donor – the capacity of the donor is an


essential requisite for the donation. As the fundamental
rule of giving. You cannot give more than your financial
capacity. For individual to have a valid capacity to give,
the maximum amount that he can donate is 5% of his
income, while the corporation can donate maximum of
10% of its income. Another capacity to look on is the
capacity to contract of the donor. The donor must not
belong to the following (Art. 1327, Civil Code of the
Philippines):
Unemancipated minors – unemancipated minors do not possess
the capacity that is needed for being a donor. Emancipated
minors are declared by the court, and by virtue of this declaration
emancipated minors can be a donor.
Insane or demented persons – insanity dissolves the capacity of
a person to give intelligent consent, but consent given by the
donor during his lucid interval are valid and binding.
Deaf-mutes who do not know how to write – these persons are
incapable of communicating to the others effectively, therefore
cannot give intelligent consent.

• Valid object – the object of the donation must not be


contrary to law, moral, good customs, public order and
public policy.

• Forms required by law – the law requires certain to form


in order that the donation become enforceable. Under
the statute of fraud the following are the forms of
donation:
o Oral – Oral donation can be a form if the object
of donation is a movable property or personal
property which value do not exceed P5,000.

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o Written – written donation can be a form of
donation if the object of donation is a movable
or personal property which value is equal or
exceeds P5,000.
o Public Instrument – when donating immovable
or real properties the document must me
notarized.

• Acceptance – the done must accept the intent of the


donor to have a perfected donation.
Donation of Movables
1. Donation may be made orally or in writing.
a. If orally made, it requires the simultaneous
delivery of the thing or the document
representing the right donated.
b. If in writing, it does not require simultaneous
delivery of the thing donated.
2. Acceptance may be oral, in writing or tacit.
If value of the movable does not exceed P5,000 the donation may
be oral or in writing, and the acceptance may be oral, in writing
or tacit.
If the value of the movable exceed P5,000 the donation and
acceptance must be in writing, otherwise the donation is void.
Without such writing, the donation would be void, even if there
is simultaneous delivery (art. 748, Civil Code)
Donation of Immovables
1. Donation must be in writing and in public instrument
(notarized).
2. Acceptance may be made in the same deed of donation
or in separate public instrument.

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3. Acceptance must be done during the lifetime of the
donor, and the latter must be notified of the acceptance.
Chapter Exercise

I. True or False: Write true if the statement is correct and False if


the statement is incorrect.

• Donation is a mode of transferring and acquiring


properties left by the decedent.
• Donations of immovable properties may be made orally.
• Gregoria who is a 17 year old daughter can be a donor to
a contract of donation.
• Donations of immovable properties must be made in
public instrument regardless of value.
• the donation was perfected at the time the donor give
money or property to another person.
• Conceived or unborn children can be donees to a
donation.
• Donor’s tax is a tax on gratuitous disposition of property
by a living donor.
• Donees have the primary obligation to pay the donors
tax.
• Donation is valid even though the donor was mistaken
for the donee’s identity.
• Marijuana is a valid object of donation.

II. Multiple Choice. Choose the best answer for the following
questions.

1. The following are the elements of donation, except.


a. Donative intent
b. Invalid object
c. Acceptance
d. Forms required by law
2. Statement 1: The movable property which has a value of
P4,000 can be donated orally.
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Statement 2: Immovable property which has a value of
P3,000 can be donated orally.
a. Both statement is true
b. Both statement is false
c. Statement 1 is correct
d. Statement 2 is correct
3. The following are the persons that cannot give consent
therefore disqualified of being a donor.
a. Insane
b. Deaf – Mute who do not know how to read and
write
c. Hospitalized lepers
d. All of the above
4. What is the required form in the donation of real
property?
a. Written Agreement
b. Public Instrument
c. Oral Agreement
d. A or B
5. Donations of Shares of stock must be in
a. Writing
b. Writing if the value exceeds P5,000
c. A public instrument
d. Any form
6. San Miguel Corporation donated a piece of land to
University of Sto. Domingo in public instrument. The
acceptance of Sto. Domingo must be:
a. Orally
b. In writing
c. In public instrument
d. In any form.
7. Donation of house and lot must be made in:
a. Writing
b. Orally
c. Public instrument
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d. In any form
8. Which is not required in a contract of donation?
a. Legal capacity of the donee
b. Acceptance of the donee
c. Delivery
d. Intention to donate
9. Statement 1: Insane or demented person can be a donor
to a donation
Statement 2: emancipated minor can be a donor to a
donation.
a. Both statement are correct
b. Both statement are incorrect
c. Only the first statement is correct
d. Only the second statement is incorrect
10. Which of the following rate is the maximum that an
individual can make.
a. 10%
b. 5%
c. 15%
d. 25%

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Chapter 2
VOID DONATIONS
Chapter Objectives
At the end of this chapter learners are expected to demonstrate
the following learnings:

• Understand the general rule and exception with regards


to the void donations
• Apply the concept of void donations in practical
simulated donation problems
What are the void Donations?
1. General Rule: Donation between spouses, whether
direct or indirect, during marriage.
Exception: moderate gifts which the spouses may give each other
on the occasion of any family rejoicing. (art. 87, Family Code)
The following are indirect donation to a spouse, therefore void:

• To stepchild who has no compulsory heirs other


than the other spouse at the time of donation;

• To common child who has no compulsory heirs


other than the other spouse at the time of
donation;

• To the parents of other spouse;

• To the other spouse’s adopted child in cases


when, at the time of donation, the only surviving
relatives of the adopted is the adopted spouse,
the illegitimate children of the adopted, and the
surviving spouse of the adopted;

• To common adopted child who has no other


surviving heirs (art. 190, Family Code)

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Note: the term moderate is relative to the status of life of the
donor.
Illustration: case 1:
Don Manuel de Ayala, a billionaire with net asset of 16 billion,
give a necklace to his wife Amanda amounting to P50,000, during
their wedding anniversary.
Case 2: Miyong, with P32,000 net worth, give his wife Amanda an
earring worth P30,000 on their wedding anniversary.
Question: is the donation valid in both cases?
Answer: the donation in case 1 is valid while the donation in case
2 is void. In case 1 the amount of gift between spouses is
moderate, while in case 2 excessive. Looking at the net worth of
the donor it can be seen that in case 1 the amount of gift is
immaterial compare to donors net worth, while in case 2 the
amount of gift is material enough compared to his net worth.
2. Between persons living together as husband and
wife without a valid marriage (art. 87, Family Code);
A man and a woman who is cohabiting with each other does not
receive a benefit of property relation between spouses, they will
be bound on co-ownership of property, therefore the legal heir
of a man or o woman is not the common-law wife or husband but
the ascendants or descendants of the man or a woman. If they
donate things with each other they are circumventing the
purpose of Family code with regards to property relations.
Illustration: Romeo and Juliet is living with each other outside the
matrimony of marriage. During their stay with each other, they
acquire various properties under co-ownership. One of the
property acquired is their Montero Sports 2019 model. On
Juliet’s birthday, Romeo donated the aforementioned SUV to
Juliet as his birthday gift to Juliet. Is the donation valid?

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Answer: the donation was invalid, for it will be detrimental to the
legal heir of Romeo and the law does not encourage such affair
outside the matrimony of marriage.
3. Between persons guilty of concubinage or adultery
at the time of donation (art. 739, Civil code)
Concubinage is a crime committed by a married man while
adultery is a crime commited by a married woman. Any persons
convicted by final judgment of the crimes mentioned above are
cannot make a valid donation for the protection of a faithful
husband in case of adultery and faithful wife in case of
concubinage. (The life Assurance Company vs. Ebrado, G.R. L-
44059)
Illustration: Don Simoun de Buenaventura was married to
Claudia de Buenaventura, during his lifetime he is living with his
common-law wife Martina, although Simoun was not legally
separated from his legal wife. Simoun secure a life insurance
from Aguila Insurance corporation having his common-law wife
as the revocable beneficiary. When Simoun died after meeting a
car accident. Martina filed with the insurance company her claim
with regards to the insurance, while Claudia also filed to the said
insurance company her claim. Aguila having a doubt on who has
a better right filed an interpleader case at the court of first
instance in Camarines Sur. Who has a better right with regards to
the life insurance of Simoun?
Answer: Claudia has a better right over the common-law wife of
Simoun. Although the insurance was expressly designated the
common-law wife as the revocable beneficiary, the said
insurance was indirect donation to his common-law wife, which
the law prohibits. The cannot be circumvented.
4. Between persons found guilty of the same criminal
offense, in consideration thereof (art. 739, Civil
Code)
Illustration: Bee One and Bee two kidnapped Cee one, and asks
for ransom money. The father of Cee one immediately give the

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ransom. Bee one and Bee two divided the ransom equally. Bee
two realizing the effort of Bee one on their job, decided to donate
some money to Bee one. Is the donation of Bee two to Bee one
valid?
Answer: the donation was void, Bee one and Bee two cannot be
donor and Donee to each other.
5. Those made to public officer or his/her spouse,
descendants and ascendants, by reason of his/her
office (art. 739, Civil code)
Illustration:
Mayor Sarah Batan of Tacloban City receives a donation from
Don Ferdinando a wealthy businessman in Tacloban amounting
to P50,000,000. Is the donation valid?
Answer: the donation was void. Donation made to public officers
or any of his family members and immediate relatives are not
valid for the reason to discourage corrupt practices by giving
economic favors to the donors of public officials at the expense
of tax payer’s money.
6. Donations made by persons to those who cannot
inherit from them:
a. Donation to the priest who heard the
confession of the donor during his last
illness, or the minister who extended
spiritual aid to him during the same period;
b. Donations to the relatives of such priest or
minister within 4th degree
c. Donation to the church, order chapter,
community, organization, or institution to
which such priest or minister belongs;
d. Those made to a guardian with respect to
donations made by a ward before the final
accounts of the guardianship have been
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approved, except when the guardian is the
ward’s ascendants, descendants, brother or
sister;
e. Any physician, surgeon, nurse, health officer,
or druggist, who took care of the donor
during his last illness (art. 740, art. 1027, Civil
code)

Chapter Exercise
I. True or False - Write true if the statement is correct and False
if the statement is incorrect.
1. Husband can donate properties to his wife.
2. Husband can give moderate gifts to his wife during family
celebration.
3. Husband can donate property to his 7 year old stepson.
4. Husband can donate property to his 7 year old son.
5. Husband can donate property to his mother-in-law.
6. Husband can donate property to his common-law wife.
7. Convicted money launderer can donate money to another
money launderer.
8. A mayor can accept donation from other persons by reason
of his/her office.
9. A doctor can accept donation from his patient because of the
successful operation conducted by the doctor.
10. A priest who extends spiritual aid to his believer can accept
donation from the latter.
II. Multiple Choice. Choose the best answer for the following
questions.

1. Don Bosco appointed his common-law wife as the revocable


beneficiary of his life insurance. When Don Bosco died his
common-law wife file to claim the proceeds of the insurance.
Is the claim valid?
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a. Yes, being appointed as the beneficiary of the insurance.
b. No, the civil law must be used to resolve any void in the
insurance law.
c. Yes, the law recognizes the will of the decedent.
d. No, the law recognizes the will of the decedent.
2. Don Zobel, a billionaire business man, gives his wife a
diamond ring during their wedding anniversary worth
P50,000.
a. The donation was void that husband and wife cannot
donate to each other.
b. The donation was valid for the amount of the gift is only
moderate.
c. The donation was void. It is the the duty of Don Zobel to
give a diamond ring.
d. The donation was valid, Don Zobel can donate whenever
we wants it.
3. Alejandro is happily married to Susan. Susan has a son with
the other man long before he met Alejandro. Alejandro
treated his stepson as his own kin. One day Alejandro
donated a car to his stepson as a reward for his academic
excellence in college. Is the donation valid?
a. Yes, Alejandro is just exercising his liberality to give
anything he wants to whoever he likes.
b. No, Susan should be the one buying thing for his son.
c. Yes, Alejandro is obliged to provide to his stepson
d. No, Alejandro cannot give a valid donation to his
stepson, if his stepson don’t have any legal heir except
his mother Susan.
4. Alexander give a gift to his newly born son. The gift comprises
of Educational plan, a Ferrari sports car and a million pesos
cash. Is the gift valid?
a. The gift is not valid, for his son don’t have any legal heir aside
from his mother and father.
b. The gift is valid, because the gift will be beneficial to his son.
c. The gift is not valid, the son cannot use the gift items
immediately.

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d. No comment.
5. Edilberto give his Father-in-law a fighting cock worth
P250,000 to symbolize his gratitude to him for being the best
father-in-law in the world. Is the donation valid?
a. The donation is valid, in any way it is just a fighting cock.
b. The donation is void, for it being contrary to law to have a
fighting cock.
c. The donation is invalid, the law expressly prohibits donation
to the parents of his spouse.
d. None of the above.
6. Dr. Dimapatay received a gift from his patient last month
which he has operated successfully, a Lamborghini Sports car
amounting to P5,500,000. Is the donation valid?
a. The donation is valid, anyone can express their gratitude and
can give a gift.
b. The donation is valid, the donor can give what he want as
long as he affords it.
c. The donation is void, as expressly prohibits under the
Philippine law.
d. None of the above
7. Mayor Pare Ejercito received a gift from the government
contractor. The gift consist of starbucks coffee and Krispee
Kreeme Donut. Is the gift valid?
a. The gift is invalid, for the mayor being a public servant is not
allowed to accept thing from citizen.
b. The gift is invalid, for the reason that the gift was given to
him because of his position as mayor.
c. The gift is valid, for it being immaterial in value.
d. None of the above.
8. Rev. Ptr. John Paul Iglesia render an spiritual aid to Don
Emilio in his past illness. In exchange Don Emilio donated P10
million to Gospel of the Lord which Ptr. John is connected. Is
the donation valid?
a. The donation is invalid, for being expressly stated under the
Philippine law
b. The donation is invalid, for the donation should be made to
Ptr. John.

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c. The donation is valid, because the donee does not have any
connection to the donor.
d. None of the above.
9. Inday Sarah, daughter of Mayor Pandoy Sarah, received a gift
from Bong Ga, a leading business man in their town, and a
friend of his father. The gift consist of flower, chocolates and
a brand new car. Is the donation valid?
a. The donation is void, Inday cannot accept the gift if she don’t
want Bong Ga to be frineds with her father.
b. the donation is void. Donation made to public officers or any
of his family members and immediate relatives are not valid
for the reason to discourage corrupt practices
c. the donation is valid, any woman can accept a gift from a
man.
d. The donation is void, Inday have to preserved the image of a
dalagang Filipina and cant accept gift without the consent of
her father.
10. Don Tiburcio give a channel bag to his common-law wife
during their dinner date at the Soliares hotel in Pasay City
amounting to P50,000. Is the donation valid?
a. The donation is valid for it is only a moderate gift coming
from Don Tiburcio.
b. The donation is valid, the object of the donation is not
contrary to law, moral, good customs, public order, and
public policy.
c. The donation is void, for the law does not encourage that
kind of relation that would be detrimental to the legal wife.
d. None of the above.

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Chapter 3
GROSS GIFT AND ALLOWED DEDUCTION
Chapter Objectives
At the end of this chapter learners are expected to demonstrate
the following learnings:

• Understand and apply learnings about gross gift


• Understand and apply learnings about Exempt Donation
• Analyze the difference between taxable and exempt
donation
• Understand and apply learnings about allowed
deduction from gross gifts
Gross Gift
-it depends upon the citizenship and/or residence of the donor:
TANGIBLE PERSONAL INTANGIBLE
REAL PROPERTY
DONOR PROPERTY PERSONAL PROPERTY
WITHIN WITHOUT WITHIN WITHOUT WITHIN WITHOUT
CITIZE
N/RESI
DENT
/ / / / / /
NON- /
RESIDE
NT / X / X X
ALIEN
X
If there is
RECIPROCITY

Intangible Personal Property – means incorporeal property


which do not have any physical form, but represents rights and
privileges. Examples include bank deposits, trademarks, shares of
stock, patents, copyrights, bonds, notes, interest in partnership,
etc.
Illustration: Arthur McArthur an American Citizen residing in
Manila, donated a piece of land situated in Tanay, Rizal to his
friend Alejandrino amounting to P20,000. Does the gift taxable
under the Philippine law?
Answer: the gift is a valid donation under the Philippine law
therefore taxable. Any donation made by residents of the

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Philippine regardless where it is situated is taxable under the
Philippine taxation law.
INTANGIBLE ASSET SITUS
RECEIVABLE (PROMISSORY NOTE) RESIDENCE OF DEBTOR
BANK DEPOSIT LOCATION OF BANK
OTHER INTANGIBLE PROPERTIES:
A. FRANCHISE, PATENTS, COPYRIGHTS,
WHERE PROPERTY IS USED OR EXERCISED
TRADEMARKS
B. INVESTMENT IN PARTNERSHIP WHERE PARTNERSHIP IS ESTABLSIHED
C. SHARES OF STOCK, BONDS, CORPORATE
OBLIGATIONS
1. DOMESTIC CORPORATION WITHIN THE PHILIPPINES
2. FOREIGN CORPORATION WITHOUT THE PHILIPPINES
EXCEPT:
i. IF >= 85% OF BUSINESS IS IN THE
WITHIN THE PHILIPPINES
PHILIPPINES
ii. IF SHARES OR BONDS HAVE
ACQUIRED A BUSINESS SITUS IN THE WITHIN THE PHILIPPINES
PHILIPPINES

Gross Gift of Husband and Wife


Husband and Wife may donate:
a. The conjugal or community properties: each spouse shall
be considered a separate donor of his or her interest in
the property: ½ of the conjugal or community property
donated being a gift of the husband, and the other half
of that of the wife.
Illustration:
Mr. Smith which is under the absolute community of property
with his wife, donated $500 million from their community
property to Give Life Foundation as their aid to the said Charity
institution for the year 2019 on February 28, 2019. How much is
the gross gift of Mr. Smith on his donors tax return?
Answer: $250 million
Explanation: under absolute community of property husband
and wife share equal amounts on their property. Husband and
wife being a donor divide the gross gift into two, thereby realizing
$250 million as the gross gift of Mr. Smith.

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b. Separate or exclusive property owned by only one
spouse
Hearty and Cheezy, husband and wife under the exclusive
property regime. Hearty donated P900,000 to Sagik Kalikasan
Movement Inc. a non-government organization dedicated to
save the environment. how much is the gross gift of Hearty that
will appear on her Donors tax return?
Answer: P900,000
Explanation: Hearty and Cheezy being in an exclusive property
regime cannot donate what he don’t own, therefore Hearty may
only donate from her property, therefore all the donation came
from the property of Hearty.
OTHER TRANSACTIONS SUBJECT TO DONOR’S TAX

• Transfer for insufficient consideration (sec. 100,


NIRC)
Requisites:
a. The property transferred is real or personal property,
except real property classified as a capital asset
referred in section 24(D) of the Tax Code;
b. The transfer is for less than a full consideration;
c. The transfer inter-vivos.
Purpose: to prevent escape from the income tax for accepting a
lower price for the property.
Tax consequences:
GIFT (SUBJECT TO DONORS TAX) INCOME (SUBJECT TO INCOME TAX)
FMV OF THE PROPERTY TRANSFERRED PRICE (CONSIDERATION) RECEIVED
LESS: PRICE (CONSIDERATION) RECEIVED LESS: COST

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Illustration: Alberto Martinez Sold his car with plate number GAC
3241 with a FMV of 2,500,000 to his friend for a consideration
amounting to P500,000. Does the transaction mentioned
compose of a donation or a valid contract of sale?
Answer: the transaction above compose of a valid sale AND a
donation, valid sale for the amount of P500,000, that will be
subject to Income tax and the P2,000,000 will be subject to
Donors tax.
In transfers for insufficient consideration in the Sale of
Domestic Shares of Stock:
FMV of share of stock sold, Bartered or exchanged shall
be as follows:
1. If the shares are listed, but are sold, bartered, or
exchanged outside the local stock exchange, the
FMV shall be:
a. The closing price on the day the shares are
sold, bartered, or exchanged;
Or
b. The closing price on the day nearest to the
date of sale, barter, or exchanged if there is
no sales transaction of the shares in the local
stock exchange on the day it was sold,
bartered, or exchanged.
2. If the shares are not listed in the local stock
exchange, the FMV shall be determined using the
ADJUSTED NET ASSET VALUE METHOD. In such
method, all assets and liabilities are adjusted to fair
market values. The net adjusted asset minus the
adjusted liability values is the value of equity. For real
properties, the FMV shall be the highest of the zonal
value, assessor’s value, or the independent
appraiser’s value (rev. Regs. 6-2008, 6-2013).

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Note: under TRAIN law the above provision has an additional
provision. A sale, exchange, or other transfer made in the
ordinary course of business (i.e., bona fide transaction, at arm’s
length, and free from donative intent) shall be considered as
made for an adequate and full consideration. With this as long as
it is in ordinary course of business even it is insufficient in
consideration, it is still treated as valid sale.

• Condonation or remission of debt – where the debtor


did not render any service in favor of creditor.
When someone owes and the creditor condone the debt of the
debtor without any service required, the debt condone was
deemed gift and therefore be subject to donors tax.
EXEMPT DONATIONS UNDER NIRC AND SPECIAL LAWS
Donations to the following entities are exempt:

• Aquaculture Department of the Southeast Asian


Fisheries Development Center (Sec. 2, P.D. 292)

• Aurora Pacific Economic Zone and Freeport Authority


(Sec. 7, RA 10083)

• Development Academy of the Philippines (Sec. 12, PD


205)

• Girl Scouts of the Philippines (Sec. 11, RA 10073


• Integrated Bar of the Philippines (Sec. 3, PD 181)

• National Rice Research Institute (Art 5(2), PD 1620)

• National Commission for Culture and the Arts (Sec. 35,


RA No. 10066

• National Social Action Council (Sec. 4, PD 294)

• National Water Quality Management Fund (Sec. 9, RA


No. 9275)
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• People’s Television Network, Incorporated (Sec. 15, RA
No. 10390)

• People’s Survival Fund (Sec. 13, RA No. 10174)

• Philippine-American Cultural Foundation (Sec. 4, PD


3062)

• Philippine Normal University (Sec. 7, RA No. 9647)

• Philippine Investors Commission (Sec. 9, RA No. 3850)

• Philippine Red Cross (Sec. 5, RA no. 10072)

• Ramon Magsaysay Award Foundation (Sec. 2, RA 3676)

• Rural Farm School (Sec. 14, RA No. 10618)

• Task Force on Human Settlements (Sec. 3(b)(8), EO 419)

• Tubbataha Reefs Natural Park (Sec. 17, RA No. 10067)

• University of the Philippines (Sec. 25, RA No. 9500)


EXEMPTIONS OR DEDUCTIONS FROM GROSS GIFT
A. Dowry
a. Gifts made on account of marriage
i. Before its celebration
ii. Within 1 year thereafter
b. By parents to each of their legitimate,
illegitimate or adopted children
c. To the extent of P10,000 only
Notes: a. Child does not include step-child; b. husband and wife
are entitled to the dowry exemption separately.
b. After the implementation of RA 10963 or TRAIN Law
this provision was repealed and no longer allowed as deduction
from the gross gift.
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B. Gifts made to the national government or to any
political subdivision of the national government or to
any entity created by the government which is not
conducted for profit.
The government encourages tax payers to donate for the benefit
of the government that’s why they grant this provision for the
benefit of the donor to the government.
C. Gifts made to educational, charitable, religious,
cultural, social welfare institutions, accredited NGO’s
and trusts, philanthropic organizations, and research
institutions.
Provided:
1. The non-profit institution is a non-stock entity that
pays no dividends, is governed by trustees who do
not receive any compensation and devotes all of its
income to accomplishment of its purpose; and
2. Not more than 30% of the gifts shall be used for
administrative purposes.
Note: donation to the accredited entities are exempt, while
donations to non-accredited agencies are taxable. Before
November 16, 2007 the government body that accredit
organization is Philippine Council for NGO Certification. But due
to executive order no. 671, the accreditation authority was
transferred to the following:

• Department of Social Welfare and


Development – for charitable and/or
social welfare organizations, foundation
and associations including but not
limited to those engaged in youth, child,
women, family, disabled persons, older
persons, welfare and development.

23 | P a g e
• Department of Science and Technology
– for research and other scientific
activities.

• Philippine Sports Commission – for


sports development

• National Council for Culture and Arts –


for cultural activities

• Commission on Higher Education – for


educational activities
D. Mortgage or encumbrance on the property which
obligation is assumed by the donee (RR 2-2003)
Any encumbrance assume by the donee is not treated as gift,
therefore cannot be tax under donors taxation, and can be
deducted from the value of gross gift.
E. Those specially provided by the donor as a dimunition
of the property donated
Note: the donor may specify that a portion of donated property
will be given to other person other than the donee, that portion
shall be treated as the dimunition to the donation. Dimunition in
itself is not exempt from donors tax, but merely as deduction to
the original donation, and taxable to the next donation.

Illustration: Aguinaldo Luna donated P500,000 cash to his


brother Juan, with condition that the P100,000 amount will be
for the benefit of his nephew Goyo. How much is the net gift of
Aguinaldo to Juan?
Answer: P400,000. The P100,000 that will be for the benefit of
Goyo will be treated as dimunition to the donation.
F. Campaign contributions in cash or in kind to any
candidate which are duly reported to the COMELEC (RA.
7166)
24 | P a g e
Under Omnibus Election Code campaign contribution to any
candidate will be exempt under donors tax, provided that the
said contribution was reported to the COMELEC after election.
Any unutilized portion of the contribution shall be treated as
income of the candidate therefore will be subject to income tax,
to compensate the loss in donor’s tax.
Illustration:
Rody Dutwenty donated P10,000,000 as campaign fund of
senatorial candidate Christopher Dela Rosa in midterm election
2019. After the election Dela Rosa submitted to the COMELEC the
summary of Election expenses indicating that the P10,000,000
was disbursed in the election campaign. How much is the Donors
tax due to Rody?
Answer: None, for the reason that the provision of Omnibus
Election Code was properly followed by the donee with regards
to the election contribution.
G. Donation made for the operation of the dual training
system under RA. 7686 Dual Training System Act of
1994
a. Instructional delivery system of technical and
vocational education and training that combines
in-plant training and in-school training based on
a training plan collaboratively designed and
implemented by an accredited dual system
educational institution/training center and
accredited dual system agricultural, industrial
and business establishments with prior notice
and advice to the local government unit
concerned. Under this system, said
establishments and the educational institution
share the responsibility of providing the trainee
with the best possible job qualifications, the
former essentially through practical training and
the latter by securing an adequate level of

25 | P a g e
specific, general and occupation-related
theoretical instruction.
H. Donations of cooperatives to duly accredited
charitable, research and educational institutions, and to
socio-economic projects within their area of operations
Cooperatives have a mandate to uplift the way of living within
their area, by this any donation of cooperatives to accredited
charitable, research and educational institutions, and to socio-
economic projects that may uplift the life of their members in
their area of operations.
I. Donations of lands certified by the LGU to have been
donated for socialized housing purposes.
Socialized housing are project of the government any donation
for the benefit of the government are exempt in donor’s tax to
encourage donation to the government.
VALUATION OF GIFTS – properties shall be valued at Fair
Market Value at the time the gift is made
PROPERTY VALUATION
FMV WHICH IS THE HIGHER OF THE ZONAL
REAL PROPERTY
VALUE OR THE ASSESSOR'S VALUE
PERSONAL PROPERTY FMV AT THE TIME OF GIFT
AVERAGE OF THE LOWEST AND HIGHEST
QUOTES ON THE VALUATION DATE (DATE OF
STOCKS LISTED IN THE STOCK EXCHANGE
GIFT) OR DAY NEAREST TO THE VALUATION
DATE
FOR COMMON SHARES 1) NET ASSET VALUE OR
STOCKS NOT LISTED IN THE STOCK
2) BOOK VALUE, WHICHEVER IS HIGHER
EXCHANGE
PREFERRED SHARES - PAR VALUE
FMV IS THE DISCOUNTED AMOUNT OF THE
NOTES; ACCOUNTS RECEIVABLE
UNPAID PRINCIPAL PLUS INTEREST.
1. AT THE TIME OF DONATION, THE FMV OF
THE STOCK OPTION
2. UPON EXERCISE OF THE OPTION, THE
STOCK OPTIONS
DIFFERENCE BETWEEN THE HIGHER OF THE BV
OR FMV OF THE UNDERLYING SHARES AT THE
TIME OR EXERCISE, AND THE EXERCISE PRICE

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SUMMARY OF DEDUCTIONS/EXEMPTIONS
DONOR
EXEMPTION/DEDUCTION CITIZENS/RESIDENT NON-RESIDENT
ALIENS ALIENS
DOWRY / X
GIFTS TO GOVERNMENT / /
GIFTS TO NON-PROFIT ORGANIZATIONS / /
MORTGAGE ASSUMED BY DONEE / /
DIMUNITION OF GIFT PROVIDED BY THE DONOR / /
OTHER / /

Note: Dowries are not anymore allowed as deduction from gross


gift after the implementation of TRAIN Law whether
citizen/residents or Non-resident alien.

27 | P a g e
Chapter Exercise
I. True or False – Write True if the statement is correct and false
if the statement is incorrect.
1. Citizen donor shall not be subject to donors tax when the
situs of the object of donation is outside the philippines.
2. Non-resident alien donating properties outside the
philippines will be subject to donors tax
3. Bank deposit have a situs where the depositor lives.
4. Husband and wife can be a donor at the same time to one
donee.
5. Transfer for insufficient consideration can be tax under
donors taxation
6. Sale of capital asset for insufficient consideration will be
taxed under donor’s taxation.
7. Donation to Development Academy of the Philippines is
exempt under Donor’s taxation.
8. Donation to Philippine Red Cross is subject to Donor’s Tax
9. Dowries can be deducted from the gross gift before
implementation of TRAIN law.
10. Gifts made to the government are taxable under Donors
taxation.
II. Multiple Choice Questions – Choose the best answer for the
following questions.

1. Mr. Sayonara which is under the absolute


community of property with his wife, donated $500
million from their community property to Give Life
Foundation as their aid to the said Charity
institution for the year 2019 on February 28, 2019.
How much is the gross gift of Mr. Sayonara on his
donors tax return?
a. $500 million
b. $250 million
c. $200 million
d. $100 million
28 | P a g e
2. Helena, a Filipino citizen, having a shares of stock in
United Airlines in USA amounting to $4,000, donated
the shares to his friend in the Philippines. How much
would be the gross gift of Helena under the Philippine
Donors taxation?
a. $4,000
b. $2,000
c. $1,000
d. None
3. Donato sold his house and lot with FMV of P1,000,000
to Artemio for a consideration of P200,000. How much
is the gross gift of Donato?
a. P60,000
b. P1,000,000
c. P200,000
d. None
4. Bikoy donated an antique painting worth P12,000,000
to Philippine-American Cultural Foundation on February
25, 2019. How much is the gross gift of Bikoy?
a. P12,000,000
b. P720,000
c. P10,000,000
d. None
5. On February 14, 2008, Hector married Daniella.
Daniella’s father give the newlywed couple after their
wedding a brand new car as his wedding gift to the
couple amounting to P980,000. How much is the
allowed deduction as dowries to the newly wed?
a. P10,000
b. P980,000
c. P0
d. I don’t know
6. Marcelo Panuelos donated a piece of land to Local
Government unit of Goa to be used as the new school
ground of the newly founded local high school in Goa,
Camarines Sur. The land has the assessed value of
P1,000,000, FMV of P1,400,000 and Zonal Value of
P800,000. How much is the taxable gift of Marcelo?
29 | P a g e
a. P1,000,000
b. P1,400,000
c. P800,000
d. None
7. Sagip Bata Foundation an accredited NGO under
Department of Social Welfare and Development receive
a donation from Krissy amounting to P1,000,000. How
much will be the allowed deduction from the Donation?
a. P1,000,000
b. P500,000
c. P100,000
d. None
8. Adorado donated Land to his friend Baldo, with a FMV
of P950,000, attached to the land is the unpaid
mortgage amounting to P200,000 which is assumed by
baldo. How much will be the allowable deduction to the
aforementioned donation?
a. P950,000
b. P200,000
c. P0
d. None
9. Gerardo donated a building with a FMV of P2,500,000
to TESDA to be used as classroom for the dual training
agreement between TESDA and DepEd. How much is
the exempt donation?
a. P2,500,000
b. Up to P1,000,000 only
c. P0
d. None
10. MaMatay Agricultural Cooperative donated a piece of
land to Adriatico Research Foundation for the
Experimental research to be conducted by Adriatico for
the benefit of MaMatay Agri. Coop. the land valued at
P900,000. How much is the allowed deduction from the
gross gift of MaMatay?
a. None
b. P900,000
c. Up to P500,000 only
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d. P0

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Chapter 4
DONORS TAX
Chapter Objectives:
At the end of this chapter learners are expected to demonstrate
the following learnings:

• Understand how to compute Donor’s tax


• Able to distinguish the different tax rates applicable in
donating money or properties.
• Appraise donors taxation in each of the simulated
taxation problem
Nature of Donor’s Tax
-also called gift tax
-imposed on gratuitous transfer of real or personal, tangible or
intangible property.
Purpose:
1. To prevent the circumvention of estate taxation (before
TRAIN Law)
2. To compensate for the loss or decrease of income taxes
and estate taxes when large estate are split.
Note: The donors tax was implemented to prevent circumvention
of the Estate tax which extracts higher tax than the Donors tax.
But after the implementation of TRAIN Law this purpose seems
to come to its end, because both estate tax and donors tax has
the same rate after the allowable deductions.
Requisites:
1. There is gratuitous transfer of property
This means that the donor exercise its right of liberality to give or
transfer money or Property to another person without violence,

32 | P a g e
intimidation, mistake, fraud and undue influence to give certain
money or property.
2. Both the donor and the done are living at the time of the
transfer.
The Donor must be living at the time of donation because if he is
not living at the time of transfer, estate taxation will be in effect
than the donors tax. In case on the part of the donee, if he is not
alive at the time of transfer he cannot accept the said donation,
acceptance is one of the elements of donation.

DONOR’S TAX FORMAT:


GROSS GIFT P XXX
LESS: ALLOWED DEDUCTIONS XXX
NET GIFT XXX
TIMES: TAX RATE
DONOR’S TAX XXX
COMPUTATION OF DONOR’S TAX
A. the donor’s tax is computed on the basis of the net gifts made
during a calendar year. The net gifts is determined by
subtracting from the gross gift amount of exemption or
deduction allowed by law.
1. If the done is not a stranger – the tax payable by the
donor shall be computed using the tax table below
a. Not a stranger means a person is a:
i. Brother, sister (whether whole or half blood),
spouse, ancestor and lineal descendant; or
ii. Relative consanguinity in the collateral line within
the 4th degree of relationship

33 | P a g e
If the net gift is:

OVER BUT NOT OVER TAX SHALL BE PLUS OF EXCESS OVER


- 100,000.00 EXEMPT -
100,000.00 200,000.00 - 2% 100,000.00
200,000.00 500,000.00 2,000.00 4% 200,000.00
500,000.00 1,000,000.00 14,000.00 6% 500,000.00
1,000,000.00 3,000,000.00 44,000.00 8% 1,000,000.00
3,000,000.00 5,000,000.00 204,000.00 10% 3,000,000.00
5,000,000.00 10,000,000.00 404,000.00 12% 5,000,000.00
10,000,000.00 ABOVE 1,004,000.00 15% 10,000,000.00

2. If the done is a stranger – the tax payable shall be 30% of the


net gifts
B. Gift taxes are computed on a cumulative basis over a period
of 1 calendar year
Note: after the implementation of TRAIN Law, the flat rate of 6%
of the net gift is the donors tax due of the donor, regardless of
his relation to the donee in excess of P250,000.
At the end of this chapter learners are expected to demonstrate
the following learnings:
The following are successive donation made by Santiago
Guerrero for the year 2019.
Santiago Guerrero donated P50,000 cash to his friend in need last
January 30, 2019. How much is donor’s tax due to Mr. Guerrero?
Answer: none, after the implementation of TRAIN law, the first
P250,000 worth of donation for the year is exempt.
On February 14, 2019, Mr. Guerrero donated car worth P750,000
to Ivan, his loyal servant. How much is the donors tax due to Mr.
Guerrero?
Answer: P33,000. The gift on January 30 and February 14 has
been added and deducted with the exempt amount then multiply
with the applicable tax rate of 6%.
On March 31, Mr. Guerrero donated P2,000,000 to International
Rice Research Institute to fund certain research program of the
institute. How much is the tax due of Mr. Guerrero?
34 | P a g e
Answer: None, any donation to International Rice Research
Institute is exempt under the special law in the Philippine.
On May 10, Mr. Guerrero donated a piece of land to his right
hand man, amounting to P890,000. How much is the donors tax
due of Mr. Guerrero?
Answer: P53,400.
P890,000 + P750,000 + P50,000 = P1,690,000 – P250,000 =
P1,440,000 * 6% = P86,400 – P33,000 = P53,400
Explanation: the previous tax payment made by Mr. Guerrero is
deducted to the tax due to arrive at the current tax due of
P53,400

35 | P a g e
Chapter Exercise
I. True or False: Write True if the statement is correct and false
if the statement is incorrect.
1. Donors tax is also called gift tax
2. Donors tax is a property tax
3. Donor’s tax was imposed to gratuitous transfer upon death
of the giver.
4. The Donor must be living at the time of donation
5. the donor’s tax is computed on the basis of the gross gifts
made during a calendar year
II. Computation: compute the Donors tax due in each donation
below.
Mr. and Mrs. K, made the following donations of conjugal funds
of properties in 2017 (unless stated otherwise), as follows:
1. February 14: to L, a legitimate son, a piece of land with
FMV of P400,000 on account of L’s graduation from
college
2. May 14: to M, a legitimate daughter on account of M’s
marriage to be celebrated on December 25, 2017,
house and lot with FMV of P1,000,000
3. June 14: to N, Brother of Mrs. K, P200,000
4. September 14: to O, the efficient and beautiful
secretary of Mr. K for taking care or Mr. K while mrs. K
is vacationing in USA, jewelry worth P300,000
5. October 14: to P, the honest and good looking driver of
Mrs. K who accompanied Mrs. K on her trip to and from
USA, a necklace worth P500,000
6. December 14: to Q, the daughter of O on account of Q’s
birthday, pieces of jewelry inherited by MR. K during
marriage, with FMV of P400,000
7. December 25: to R, a legitimate son, a residential house
and lot with FMV of P1,200,000 but subject to the
condition that R would assume the mortgage
indebtedness in the amount of P400,000

36 | P a g e
III. Computation: compute for the donors tax due in every
donation.
Mr. and Mrs. Mayaman, made the following donations of
conjugal funds of properties in 2019 (unless stated otherwise),
as follows:
1. February 14: to L, a legitimate son, a piece of land with
FMV of P400,000 on account of L’s graduation from
college
2. May 14: to M, a legitimate daughter on account of M’s
marriage to be celebrated on December 25, 2017,
house and lot with FMV of P1,000,000
3. June 14: to N, Brother of Mrs. K, P200,000
4. September 14: to O, the efficient and beautiful
secretary of Mr. K for taking care or Mr. K while mrs. K
is vacationing in USA, jewelry worth P300,000
5. October 14: to P, the honest and good looking driver of
Mrs. K who accompanied Mrs. K on her trip to and from
USA, a necklace worth P500,000
6. December 14: to Q, the daughter of O on account of Q’s
birthday, pieces of jewelry inherited by MR. K during
marriage, with FMV of P400,000
7. December 25: to R, a legitimate son, a residential house
and lot with FMV of P1,200,000 but subject to the
condition that R would assume the mortgage
indebtedness in the amount of P400,000

37 | P a g e
Chapter 5
Filing
Chapter Objectives
At the end of this chapter learners are expected to demonstrate
the following learnings:

• Understand the filing process of Donors Tax Return


• Evaluate the Preparation of Donors tax Return
• Make a Donors tax return
DONOR’S TAX RETURN
Who files?
Any individual who makes any transfer through gift.
Note: no return is required if the transfer is exempt from donor’s
tax, like donations to the national Government or to non-profit
institutions.
Illustration:
Don Lucas donated a piece of land for exclusive use of Philippine
Normal University amounting to P7,400,000. Does Don Lucas
required to File a Donors tax return?
Answer: Don Lucas is not anymore required to file his donors tax
return regarding his exempt donation to PNU.
Time of filing?
Within thirty (30) days from the date the gift (donation) is made.
Time of payment?
At the time of filing the return.
Payments may also be made thru the ePayment channels of AABs
thru either their online facility, credit/debit/prepaid cards, and
mobile payments.

38 | P a g e
Where to file?
a. If donor is a resident donor (citizen or
resident alien) – with the Authorized Agent
Bank, Revenue District Office, collection
officer or duly authorized treasurer of the
city or municipality where the donor is
domiciled at the time of transfer, or with the
office of the commissioner if donor has no
legal residence.
Note: When the return is filed with an AAB,
taxpayer must accomplish and submit BIR-
prescribed deposit slip, which the bank teller
shall machine validate as evidence that
payment was received by the AAB. The AAB
receiving the tax return shall stamp mark the
word “Received” on the return and also
machine validate the return as proof of filing
the return and payment of the tax by the
taxpayer, respectively. The machine
validation shall reflect the date of payment,
amount paid and transactions code, the
name of the bank, branch code, teller’s code
and teller’s initial. Bank debit memo number
and date should be indicated in the return
for taxpayers paying under the bank debit
system.
b. If donor is non-resident donor (non-resident
alien) – with the Philippine Embassy or
Consulate in the country where he is
domiciled at the time of transfer; or directly
with the office of commissioner (RDO no.
39).
Contents of the donor’s tax return
The return shall set forth:

39 | P a g e
1. Each gift made during the calendar year which is to be
included in computing net gifts;
2. The allowed deductions claimed;
3. Any previous net gifts made during the same calendar
year;
4. The name of the done; and
5. Such further information as may be required (sec. 103
(A), NIRC).
Mandatory Requirements [Additional two (2) photocopies of
each document]
1. Duly Notarized Original Deed of Donation
2. Taxpayer Identification Number (TIN) of Donor and Donee/s
3. Proof of claimed tax credit, if applicable
4. Duly Notarized Original Special Power of Attorney (SPA) for the
transacting party if the person signing is not one of the parties to
the Deed of Donation
5. Validated return and Original Official Receipt/Deposit Slip as
proof of payment; for no payment return, copy of
Acknowledgement Receipt of return filed thru eBIRForms
For Real Properties: [Additional two (2) photocopies of each
document]
6. Certified True Copy/ies of the Original/Transfer/Condominium
Certificate/s of Title of the donated property, if applicable
7. Certified True Copy/ies of the Tax Declaration at the time or
nearest to the date of the transaction issued by the Local
Assessor’s Office for land and improvement, if applicable
8. Certificate of No Improvement issued by the Assessor’s Office,
if applicable

40 | P a g e
For Personal Properties: [Additional two (2) photocopies of
each document]
9. Proof of valuation of shares of stock at the time of donation, if
applicable;
a. For shares of stocks not listed/not traded - Audited Financial
Statement of the issuing corporation nearest to the date of
donation with computation of the book value per share
b. For shares of stocks listed/traded – Value at the time of
donation or the closing rate nearest to the date of donation
c. For club shares – Transaction value on the date of donation as
published in the newspaper
10. Stock certificate
11. Proof of valuation of other types of personal properties, if
applicable;
12. Proof of claimed deductions, if applicable;
13. Certificate of deposit/investment/indebtedness/stocks for
donated cash or securities;
14. Certificate of registration of motor vehicle, if any.
Other Additional Requirements, if applicable: [Additional two
(2) photocopies of each document
Duly Notarized Original SPA, if the person
transacting/processing the transfer is not a party to the
transaction
Certification from the Philippine Consulate if document is
executed abroad
Location Plan/Vicinity map, if zonal value cannot be readily
determined from the documents submitted

41 | P a g e
Certificate of Exemption/BIR Ruling issued by the
Commissioner of Internal Revenue or his authorized
representative, if tax exempt
Such other documents as may be required by law / rulings /
regulations / etc.
Credit for foreign donor’s tax paid
- Available only to resident donors (citizen or resident
aliens donors)
- Subject to limits
Limits
NET GIFT (PER FOREIGN COUNTRY) PHILIPPINE
X
a. TOTAL NET GIFTS DONOR'S TAX

NET GIFTS (IN ALL FOREIGN COUNTRY) PHILIPPINE


X
b. TOTAL NET GIFTS DONOR'S TAX

RULES:
1. If there is only one foreign country, only limit A is used.
2. If there are two or more foreign countries, use both limits
Penalties

There shall be imposed and collected as part of the tax:

1. A surcharge of twenty-five percent (25%) for the following


violations:

a. Failure to file any return and pay the amount of tax due on or
before the due date;

b. Filing a return with a person or office other than those with


whom it is required to be filed, unless otherwise authorized by
the Commissioner;

c. Failure to pay the full or part of the amount of tax shown on


the return, or the full amount of tax due for which no return is
required to be filed on or before the due date;
42 | P a g e
d. Failure to pay the deficiency tax within the time prescribed for
its remittance in the notice of assessment.

2. A surcharge of fifty percent (50%) of the tax or of the deficiency


tax, in case any payment has been made on the basis of such
return before the discovery of the falsity or fraud, for each of the
following violations:

a. Willful neglect to file the return within the period prescribed


by the Code or by rules and regulations; or

b. A false or fraudulent return is willfully made.

3. Interest at the rate of double the legal interest rate for loans
or forbearance of any money in the absence of an express
stipulation as set by the Bangko Sentral ng Pilipinas from the date
prescribed for remittance until the amount is fully remitted:
Provided, that in no case shall the deficiency and the delinquency
interest prescribed under Section 249 Subsections (B) and (C) of
the National Internal Revenue Code, as amended, be imposed
simultaneously.
4. Compromise penalty as provided under applicable rules and
regulations.

43 | P a g e
Chapter Exercise
I. Filling up Donors Tax Return
1. Polong donate the following properties:
• P2,000,000 car on November 2, 2018 to his
favorite nephew
• P3,000,000 agricultural lot on January 5, 2019
to his son who is getting married
• P4,000,000 building on February 14, 2019 to his
father who is getting married
• P5,000,000 cash on July 1, 2019 to ABS-CBN
Foundation (non-accredited NGO of
Government)
• P1,000,000 cash on August 1, 2020 to his
mother in law.
Fill up the Donors Tax Return assuming that the
Donor files his Return for 2019 on August 15, 2019.
2. Mr. and Mrs. Lembres transferred the following
properties in 2018:
• P400,000 cash to daughter, Jane as Graduation
Gift
• P600,000 land to son, Rogelio as wedding gift
• P560,000 car to Emily, Mr. Lembre loyal
Secretary as birthday gift.
Assuming you are the accountant of Mr. Lembres,
fill up his Transfer Tax return for the year 2018
3. Mr. and Mrs. Napakayaman, made the following
donations of conjugal funds of properties in 2019
(unless stated otherwise), as follows:
• February 14: to L, a legitimate son, a piece of land with
FMV of P400,000 on account of L’s graduation from
college
• May 14: to M, a legitimate daughter on account of M’s
marriage to be celebrated on December 25, 2017,
house and lot with FMV of P1,000,000
44 | P a g e
• June 14: to N, Brother of Mrs. K, P200,000
• September 14: to O, the efficient and beautiful
secretary of Mr. K for taking care or Mr. K while mrs. K
is vacationing in USA, jewelry worth P300,000
• October 14: to P, the honest and good looking driver of
Mrs. K who accompanied Mrs. K on her trip to and from
USA, a necklace worth P500,000
• December 14: to Q, the daughter of O on account of Q’s
birthday, pieces of jewelry inherited by MR. K during
marriage, with FMV of P400,000
• December 25: to R, a legitimate son, a residential house
and lot with FMV of P1,200,000 but subject to the
condition that R would assume the mortgage
indebtedness in the amount of P400,000
Assuming on December 26, 2019 the accountant of Mr.
Napakayaman filed the Donors tax return. Fill up the Donors
tax return for the year 2019.

Note:
The Donor’s Tax Return can be Downloaded from this link:
https://www.bir.gov.ph/images/bir_files/taxpayers_service
_programs_and_monitoring_1/1800_Jan%202018%20ENCS
_final.pdf

45 | P a g e
Bibliography

• Rex B. Banggawan, CPA, MBA. Business and Transfer


Taxation (2017). Real Excellence Publishing . Manila

• Atty. Jack L.A. De Vera, CPA, Quicknotes in Taxation, CPA


Review School of the Philippines, Sampaloc, Manila.

• Tax Review Handouts for CPA Examination

• Taxpayers Service Programs & Monitoring Dvision.


(n.d.). Transfer Tax Return. Retrieved July 5, 2019,
from https://www.bir.gov.ph/index.php/bir-
forms/transfer-tax-return.html

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