False – The value of donated personal property must exceed P5,000.. False – If resident alien donates, he shall be subject to donor’s tax in the Philippines for his properties within and
Trang 1Chapter 6: DONOR’S TAX
CHAPTER 6
DONOR’S TAX
Problem 6-1
1 False – there is no consideration in donation
2 False – during the lifetime of the donor
3 True
4 False – It is enough that the duly representative of the incapacitated donee to receive the donation
5 True
6 False – Real property donation must be put in writing regardless of value
7 True
8 False – The value of donated personal property must exceed P5,000
9 True
10 True
11 False – not gifts
12 False – constitutes dividend income
13 True
Problem 6-2
1 True
2 False – If resident alien donates, he shall be subject to donor’s tax in the Philippines for his properties within and outside the Philippines
3 True
4 True
5 True
6 False – only one-half of the share is donated
7 False – only if the gift is on account of marriage
8 False – only the first P100,000 is exempt
9 False – may be subject to business tax such as VAT, custom duties, or excise tax
10 False - When the donee is a stranger, the tax rate is 30%
11 True
12 False - excise tax – transfer of property by way of gift inter vivos
Problem 6-3
1 Zero, because the renunciation is a general renunciation
2 P30,000 or 30% of P100,000 A third cousin is a stranger for donor’s tax purposes
3 The total amount of donor’s tax is P62,000, computed as follows:
Son Daughter-in-law Relative - P200,000 (See schedular tax table) P2,000
Note: Daughter-in-law is included as a relative for donor’s tax purposes
4 Zero Donations between husband and wife are void and not subject to donor’s tax
5 Zero Donations between a man and a woman living together as husband and wife are void and not subject to donor’s tax (Art 87, Family Code)
Trang 2Chapter 6: DONOR’S TAX
6 P30,000 or 30% of P100,000 A gift to a priest or to Church is not exempt from gift tax (Lladoc vs Commissioner of Internal Revenue, L-19201, 14 SCRA, p 292) – assume
donation is made to a church established and operates within the Philippines
7 P600,000 or 30% of P2,000,000 There is no blood relationship between corporation, hence both are stranger from each other
8 P40,400
Tax credit, limit (P404,000 x 500,000/5,000,000) - lower P40,400 P40,400
9 P1,244,000
Philippine donor’s tax:
Stranger (P5,000,000 – P500,000) x 30% 1,350,000 P1,364,000 Less: Tax credit
Actual donor’s tax – foreign (lower) P120,000 120,000
Tax credit, limit (P1,364,000 x 500,000/5,000,000) 136,400
0
10 P135,000
Problem 6-4 Problem 6-5 Problem 6-6
Problem 6-7 C
Father Mother
Trang 3Chapter 6: DONOR’S TAX
Note: There is donor’s tax on the renunciation of inheritance because the renunciation is specifically for Daw
Problem 6-8 D
Second donation:
Add: Dowry deducted in two donations (P10,000 x 2) 20,000
Problem 6–9 A
Problem 6–10 D
No reciprocity With reciprocity
-Problem 6–11 A
Trang 4Chapter 6: DONOR’S TAX Problem 6–12 A
Donations made between a man and a woman living together as husband and wife are void, and therefore, not subject to donor’s tax
Problem 6–13 D
Problem 6–14 D
Problem 6–15 C
Problem 6–16
1 C
Gross gifts, as of August 15, 2002 (P150,000 x 2 lots)
Less: Deductions
Net gifts, August 15, 2002
Donor’s tax on P200,000
Tax on excess (P300,000 – P200,000) x 4%
Total donor’s tax
P300,000 0 P300,000
P 2,000 4,000
P 6,000
2 D
Wedding gifts, as of November 15, 2002
Less: Deductions - dowry
Net gifts, November 15, 2002
Add: Previous, net gifts
Total net gifts
Donor’s tax on P200,000
Tax on excess (P440,000 – P200,000) x 4%
Total donor’s tax
Less: Donor’s tax – August 15, 2002
Donor’s tax – November 15, 2002
P150,000 10,000 P140,000
300,000 P440,000
P 2,000 9,600
P 11,600 6,000
P 5,600
Problem 6–17 D
Problem 6–18 D
No deduction is allowed for donations on account of birthday.
Problem 6–19 B
Problem 6–20 B
Trang 5Chapter 6: DONOR’S TAX Problem 6–21 A
The donation is taxable because more than 30% of it shall be used for administration purposes
Problem 6–22 D
Estate tax Donor’s tax
Tax savings if estate tax is paid (P404,000 – P355,000) P 49,000
Problem 6–23
1 Donors tax for relatives:
Oct 1 - To his daughter on account of graduation 500,000
2 Donors tax for strangers:
Problem 6–24
Mr Dinero Mrs Dinero
June 28, 2005 (P2,000,000/2) – P10,000 990,000 990,000
Donor’s tax paid on March 30, 2005
Problem 6–25
Trang 6Chapter 6: DONOR’S TAX Problem 6–26
To Garci, his brother, as renunciation of inheritance 400,000
Note: No dowry is allowed for nonresident alient
Problem 6–27
Problem 6–28
Correction:
The date for requirement No 2 should be November 5, 2005 instead of November 5, 2002
1 December 25, 2005:
Average value per share (P500 + P450)/ 2
Multiply by number of shares
Taxable base of the gift
P 475 1,000 P475,000
2 The same answer with number 1
Problem 6–29
There is no donor’s tax because the donations are donation mortis causa, void donation and tax- exempt donation
Properties:
a House and lot
b Parejo car
c Business
d Furniture and fixtures
e Time deposit
Subject to estate tax because the transfer shall take effect upon death of the donor (included in the last will and testament) The value of property donated is P200,000 and it was made orally The donation is null and void because personal property donated with value exceeding P5,000 should be put in writing to become a valid donation
Revocable donation is a revocable transfer, hence, subject to estate tax
Donation mortis causa is subject to estate tax
The amount is P100,000 given to his illegitimate daughter This donation is tax exempt because the first P100,000 of donation to relatives shall not be subjected to donor’s tax
Problem 6–30
Problem 6–31
Donations to relatives:
Trang 7Chapter 6: DONOR’S TAX
2006:
January 31
November 30
Car to Uncle Less: Encumbrances assumed by the donee Net taxable gift – January 31, 2002
Donor’s tax on P200,000 Tax on excess (P250,000 – P200,000) x 4%
Donor’s tax for January 31 donation House and lot to his son on account of marriage Less: Dowry exemption (weeding was held beyond one year) Net gifts
Add: Previous net gifts during the year Aggregate taxable gift
Donor’s tax on P500,000 Tax on excess (P840,000 – P500,000) x 6%
Total Less: Donor’s tax for previous gifts during the year Donor’s tax for November 30 donation
P300,000 50,000 P250,000
P 2,000 2,000
P 4,000 P600,000
0 -P600,000
250,000 P850,000
P 14,000 21,000
P 35,000 4,000
P 31,000
Donations to strangers:
2006:
June 30
August 31
October 31
Cash to Miss Rosal, a radio manager Less: Diminution of gift (P100,000 x 60%) Net taxable gift
Donor’s tax for June 30 donation (P40,000 x 30%) Land to National Government
Less: Deduction (total amount) Net taxable gift
Donor’s tax for August 31 donation Cash to non-profit organization – 40% Administrative Less: Deduction
Net taxable gift Donor’s tax for October 31 donation (P400,000 x 30%)
P100,000 60,000
P 40,000
P 12,000 P500,000
500,000
P 0 -None P400,000
0 -P400,000 P120,000
Total donor’s tax during 2006:
Total donor’s tax to relatives (P30,400 + P4,000)
Total donor’s tax to stranger (P12,000 + P120,000)
Total donor’s tax for the year 2006
P 35,000
132,000 P167,000
Problem 6–32
Net gift to daughter on account of marriage (P50,000 –
P10,000)
P 40,000
Trang 8Chapter 6: DONOR’S TAX
April 1 – Gift to mother
June 10 – Wedding gift to son (P50,000 – P10,000)
Total net gift during the year
Donor’s tax on P100,000
Donor’s tax on excess P30,000 x 2%
40,000 90,000
P130,000 Tax exempt
P 600
Problem 6–33
1 January 29, 2006
Gift on account of their daughter’s marriage P250,000 P250,000
Tax on excess P40,000 x 4% 1,600 1,600
P12,120 December 30, 2005 gift Nilo Co Nila Co
Previous gift – June 1, 2005 240,000 240,000
Tax on excess P140,000 x 4% 5,600 5,600
Less: Tax on previous gift 3,600 3,600
P12,533
Note: The surcharge is willful neglect (50%) because Mr and Mrs Co donated twice already in
2005, yet they did not pay the donor’s tax within 30 days from the date of donation in both occasion, hence, habitual and intentional neglect
Problem 6–34
Relative Stranger Total Donor’s tax on property located in Japan, P1,000,000
Donor’s tax on property located in the Philippines
(P2,000,000 x 30%)
Total donor’s tax in the Philippines
P44,000
P600,000
P 44,000
600,000 P644,000 Computation of donor’s tax still due and payable:
Total donor’s tax in the Philippines
Less: Allowable tax credit: - Actual lower than limit
Limit (P1,000,000/ P3,000,000) x P644,000
Donor’s tax still due and payable P214,667
P644,000 70,000 P574,000
Problems 6–35
Trang 9Chapter 6: DONOR’S TAX
Gift to Property donated: Relatives Strangers Total
To son - House and lot ($500,000 x P50) – P10,000
Carabaw FX – to brother-in-law
Taxable base
Philippine donor’s tax:
First P10,000,000
Tax on excess (P14,990,000,000 x 15%)
Total
Less: Tax credit allowed
Donors tax rate for donation made to strangers
Net donor's tax
P24,990,000 P24,990,000
P 1,004,000
2,248,500
P 3,252,500 1,000,000
P 2,252,500
P 500,000
P 500,000
30%
P 150,000 P 2,402,500 Note: Donation to common-law-wife is void Hence, no donor’s tax
Computation of tax credit allowed:
Limit 1: (P24.990M/ P25.490M) x P2,402,500
Allowed: Actual, lower amount
P2,335,373 P1,000,000