Northern CPAR: Taxation – Donor’s Taxation

NORTHERN CPA REVIEW

4 Floor Pelizloy Centrum, Lower Session Road, Baguio City, Philippines
th

Mobile Numbers: SMART 09294891758 & GLOBE 09272128204

E-mail Address: ncpar@yahoo.com
REX B. BANGGAWAN, CPA, MBA

TAXATION
TRANSFER TAXATION: DONOR’S TAX

Donation tax
Donor’s tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of
property between two or more persons who are living at the time of the transfer. It shall
apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect
and whether the property is real or personal.
Why is donation subjected to tax?
1. Donor’s tax serves to compensate for loss of income taxes to the government brought
by splitting the capital resources to smaller portions.
2. To prevent the avoidance of estate tax.
3. To compensate for the limitation of income taxation.
Essential Requisites of donation:
1. Capacity of the donor
2. Intention to Donate**
3. Donative Act – actual or constructive (i.e.: execution of a public instrument) delivery
4. Acceptance by the donee
*required only in direct donation but not with indirect donation as in the case of
transfer with insufficient consideration.
Kinds of Donation:
1. Inter Vivos – donation between living individuals
2. Mortis Causa – takes effect upon the death of the donor
Types of Donor:
A. Citizen or Resident Alien
Properties transferred regardless of location (i.e.: within or outside the Philippines) is
taxable under Donor’s Taxation.
B. Non-resident Alien
Only properties within the Philippines are subject to Donor’s Tax.
Which Donation can be included in Gross Gift?
Alien
Citizen Reside Non-
nt resident
Properties located in the Includ Include Include
Philippines e
Properties located abroad Includ Include Exclude
e
Which properties are considered located in the Philippines?
For purposes of Donor’s Taxation the following are situated in the Philippines:
1. franchises which must be exercised in the Philippines
2. share, obligations, or bonds issued by any corporation or sociedad anonima organized
in the Philippines in accordance with its laws
3. share, obligations, or bonds issued by any foreign corporation 85% of the business of
which is located in the Philippines
4. share, obligations, or bonds which have acquired situs in the Philippines
5. any personal property, whether tangible or intangible, located in the Philippines
Types of Recipients:
1. Relatives – includes
a. brother or sister (whether half or whole blood), spouse, ancestor or lineal
descendants
b. a relative by consanguinity in the collateral line within the fourth degree of
relationship
2. Stranger – other than relatives
Note to candidates:

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For purposes of donor’s tax, the degree of relationship considered is up to the 4th
degree of consanguinity; for estate tax purposes, up to the 5th degree of
consanguinity.

Nature of Donation:
a. There is a transfer of properties (real or personal, tangible or intangible) directly or
indirectly in trust or otherwise.
b. The transfer is gratuitous (without consideration).
c. The donation is made inter-vivos.

Classification of Donor’s Tax:

a. progressive – when the tax base increases, the rate increases
b. proportional tax – fixed percentage to apply to donations to strangers
c. excise tax – being a on privilege to transfer properties
d. direct tax – paid by the statutory taxpayers without shifting
e. ad valorem tax – imposed based according to value
f. national tax – levied and collection by the national government
g. general tax – fiscal or revenue purpose, not specific

Mode of Execution of Donation:

Depending on the property involved, donation can be executed by the following:
A. Real or immovable property
Issuance of a public instrument, Deed of Donation
Note to candidates: Donation of real properties is not subject to donor’s tax but are
subject to the 6% capital gains tax. It should be noted that the 6% capital gains tax
covers sale, exchange and other disposition of real properties.
B. Personal property
a. Tangible
i. P5,000 and below in value – oral is allowed
ii. More than P5,000 in value – donation and acceptance should be in writing
(for validity)
b. Intangible – execution public instrument

The following transfers, if without adequate or full consideration, are not within the
scope of Donor’s Tax but within the scope of Estate Tax:
1. Revocable transfers
2. Transfers with reservation to the right to income of the property until death
3. Transfer with reservation to the right to the possession or enjoyment of the property
until death
4. Transfer in contemplation of death – refers to transfers motivated by the thought of
death not from motives associated with life
Transfers associated with life such as the following are not transfer in contemplation
of death and hence taxable under Donor’s tax:
a. to relieve the donor of the burden of management of the property
b. to save income taxes
c. to make the children financially independent
d. to settle family disputes
e. to see the children enjoy the property while the donor still lives
5. transfer under general power of appointment

Exempt Donation under Special Laws:

1. International Rice Research Institute
2. Ramon Magsaysay Award Foundation
3. National Health Insurance (R.A. 7875 – National Health Insurance Act of 1995)
4. National Commission on Indigenous People (R.A. 8371 – The Indigenous People Right
Act of 1997)
5. Donations in accordance with the R.A. 9003 – Ecological Solid Waste Management Act
of 2000.
6. Donations to the Pollution Adjudication Board under R.A. 8749 – The Philippine Clean
Air Act of 1999.
7. Southern Philippines Development Administration
8. Philippine American Cultural Foundation
9. Integrated Bar of the Philippines
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10.Development Academy of the Philippines
11.National Social Action Council
12.Museum of Philippine Costumes
13.Aqua-Culture Department of SouthEast Asia Fisheries Development Center of the
Philippines
14.Intramuros Administration
15.Philippine Inventor’s Commission
Reciprocity in Donor’s Taxation
The intangible property transferred by a non-resident alien donor shall be exempt from
Donor’s Tax if either one of the following is satisfied:
a. The country to which such non-resident alien donor is a citizen does not impose
donor’s tax on similar transfer of intangible properties to Filipino citizens not residing
therein.
b. The country to which such non-resident alien donor is a citizen allows similar
exemption to the transfer of intangible personal property of Filipinos not residing
therein.
Taxation of Gifts from Relatives
Deductions from Gross Gifts:
1. Gifts made to non-profit organization, foundation or trust:
Non-profit organization – an organization that:
a. is organized as a non-stock entity
b. pays no dividends
c. governed by trustees with no compensation
d. and devoting all income to the accomplishment of its purposes
For example: educational, charitable, religious, cultural, social welfare, philanthropic
organization, research institution and accredited non-government organization.
Provided that, not more than 30% of said gifts are used by the above entities for
administrative purposes (i.e.: to be verified by BIR)
2. Dowry exemption of P10,000
Applicable only to residents (citizens or alien); provided it is made by parents to each
of their legitimate, recognized natural, or adopted children (i.e.: per child with dowry
given) before celebration of marriage or one year thereafter
3. 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
4. Other deductions:
a. Encumbrances on the property donated, if assumed by the donee
b. Those specifically provided by the donor as a diminution of the property donated

Donor’s Tax Table

Apply for gratuitous transfers by related donor and donee

Over Not Over Basic Tax Plus % Excess

Over
- P 100,000 Exempt
P 200,000 P 0 2% P 100,000
100,000
200,000 500,000 2,000 4% 200,000
500,000 1,000,000 14,000 6% 500,000
1,000,00 3,000,000 44,000 8% 1,000,000
0
3,000,00 5,000,000 204,000 10% 3,000,000
0
5,000,00 10,000,000 404,000 12% 5,000,000
0
10,000,0 - 1,004,000 15% 10,000,000
00

Note to candidates:
The amount of gift taxable represents the net benefit accruing to the donee. Net gifts as
defined herein represents the net cumulative amounts of gift for the whole calendar year;
however, the donor’s tax thereon is paid quarterly based on net cumulative gift.

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Taxation of Gifts to Strangers
Donations to strangers are subject to 30% Final Tax.
Gifts involving Conjugal or Community Property or Co-owned property
Each spouse or co-owners shall file separate returns corresponding to his or her
respective share in the conjugal or community or co-owned property. Separate
classification of the recipient depending on their relation or affinity with the donor is
required.
Tax Credit for donor’s tax paid to a foreign country
- Can be claimed only by donors those whose gift are taxable even if made outside the
Philippines:
a. resident citizens
b. non-resident citizens
c. resident aliens
- The allowed creditable donor’s tax paid to a foreign country shall be subject to limit
similar to the limitations in foreign tax credit in income taxation and estate tax.

Filing of Return and Payment of Tax

 Donor’s tax return shall be filed within 30 days from the date of gift. The tax due
thereon is to be paid at the time of filing the return.
 For gifts made to related parties, gifts made on the same day will be filed in a singe
Donor’s Tax Return.
 For donations made by husbands and wife out of their common property, the donation
is deemed made by each; hence, both shall prepare separate Donor’s Tax Return and
claim separate deductions. For dowry exemptions, each of the spouses is entitled to
P10,000 each for each gifts made to children on account of marriage.
 The Return shall be filed to the same receiving entities as enumerated in income and
estate taxation.

Filing Requirements:
A return under oath in duplicate which shall set forth the following:
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 further information as may be required by rules and regulations made pursuant
to law
DRILL PROBLEMS
1. Donations that do not conform to legal formalities are
a. Taxable under Donor’s tax notwithstanding absence for formalities
b. Exempt from Donor’s tax
c. Subject to Estate tax
d. Subject to income tax
2. Acceptance is essential for a valid donation to be subject to donor’s tax, except
transfers
a. in trust by the donor in favour of a beneficiary
b. of business interest by the donor in favour of an stranger
c. for less than adequate consideration
d. by Filipino residents to non-resident aliens
3. The donation of an immovable property shall be made
a. In writing c. Either A or B
b. In a public instrument d. Orally
4. Using the preceding number, acceptance by the donee may be made
a. In the same deed of donation c. Either A or B
b. In a separate document d. Neither A nor B
5. The donation of a movable property may be made
a. Orally b. In writing c. Either A or B d. Neither A nor B
6. Using the preceding number, the donation and acceptance should be in writing if the
value of the property donated is
a. Less than P5,000 b. P5,000 or less c. P5,000 or more d. More than
P5,000
7. A donation which takes effect upon the death of the donor
a. Donation mortis causa

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b. Partakes of the nature of a testamentary disposition
c. Shall be governed by the law on succession
d. A, B and C
8. A donation which is intended by the donor to take effect during his lifetime
a. Shall be subject to donor’s tax using the tax table for donation
b. Shall be in writing if the value exceeds P5,000
c. Donation inter-vivos
d. A, B and C
9. Which is incorrect concerning donation?
a. Real property is transferred by donation only if made under a public instrument
b. Donation of intangible personal property should be in writing
c. Personal property amounting to more than P5,000 should be in writing
d. No one can be forced to accept the generosity of another
10.Which is correct regarding transfer inter-vivos involving personal properties for less
than an adequate and full consideration?
a. The whole value of the property will be included in gross gift
b. The difference in fair value and consideration is a gift subject to donor’s tax
c. The whole value of the property will be included in gross estate
d. The difference in fair value and consideration is part of gross estate

For Nos. 11 through 19: Indicate whether covered by Donor’s Tax, Estate Tax or Income
Tax:
11.A person transferred properties in trust in favor of another and the trust is irrevocably
designated. ___________
12.A person transferred properties in trust in favor of another and the trust is designated
as revocable. ___________
13.A person transferred properties in trust in favor of another and the trust is designated
as revocable which the transferor failed to revoke by the time of his or her death.
___________
14.A person transferred personal properties to another during his lifetime for less than
adequate consideration. The transfer is to take effect upon the death of the transferor
____________
15.A person transferred personal properties to another during his lifetime for less than
adequate consideration. The transfer is to take effect immediately ___________
16.A person transferred a real property classified as capital asset during his lifetime for
less than adequate consideration. The transfer is to take effect upon death ___________
17.A person transferred a real property classified as capital asset during his lifetime for
less than adequate consideration. The transfer is to take effect immediately
___________
18.A person transferred properties to another during his lifetime for an adequate
consideration. __________
19.The following transfers are taxable under donor’s tax, except?
a. Transfers made by the donor to relieve himself of the burden of management of
his properties
b. Transfers made by the donor to settle family disputes
c. Transfers made by a parent to see his children enjoy his properties while he still
lives
d. Transfers under power of general appointment
20.Which is incorrect?
a. Donations of non-resident aliens involving properties located abroad to residents of
the Philippines is exempt from donor’s tax
b. Renunciation of inheritance by an heir to another is not subject to donor’s tax
c. Donation by a non-resident citizen to a non-resident alien is exempt from donor’s
tax
d. Gifts are reckoned on an annual basis; the tax is determined for the whole gift
throughout the year; hence, a computation is made every time a donation is made
21.Which of the following donation may be exempt?
a. Donation of a resident alien of its properties located abroad to a non-resident alien
b. Donation of a non-resident alien of real properties located in the Philippines to a
resident alien
c. Donation of non-resident alien of intangible properties located in the Philippines to
a non-resident alien
d. Donation of a intangible properties located in the Philippines by resident aliens

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22.Which of the following is not included in gross gift?
a. Transfers to non-profit non-stock charitable institution
b. The portion of the fair value of a property transferred adequately paid for in
transfer for less than an adequate consideration
c. The portion of the donation representing dowry exemption
d. Donation to the government for public use
23.Donation to the following entities is exempt from Donor’s taxation, except
a. Accredited national professional organization of certified public accountant
(PICPA)
b. Integrated Bar of the Philippines
c. International Rice Research Institute
d. Ramon Magsaysay Award Foundation
24.I. Dowries or gifts made on account of family celebration, on or before its celebration,
or within one year thereafter, by parents to each of their legitimate, recognized
natural or adopted children, to the extent of the first P10,000 shall be exempt from
the donor’s tax
II. Donations in favour 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 provided that no
amount of said gifts shall be used by the donee for administration purposes shall be
exempt from donor’s tax
a. True, true b. True, False c. False, True d. False,
False
25.A. If the value of the movable property donated is P5,000 or more the donation and
the acceptance shall be made in writing, otherwise the donation shall be void
B. Regardless of the value of the immovable property donated, the donation and the
acceptance shall be made in writing, otherwise the donation shall be void.
a. True, True b. True, False c. False, True d. False,
False
26.I. The gift is perfected from the moment the donor effects the delivery either actually
or constructively of the property donated
II. Donor’s tax is a property tax imposed on the property transferred by the way of gift
inter-vivos
a. True, True b. True, False c. False, True d. False,
False
27.I. Where property is transferred during lifetime for less than adequate and full
consideration in money or money’s worth, then the amount by which the value of the
property exceeded the value of the consideration shall for the purpose of the donor’s
tax, be deemed a gift
II. Gifts of conjugal property made by both spouses shall be considered as having been
made one – half by the husband and the other half by the wife and is taxable ½ to
each donor spouse
a. True, True b. True, False c. False, True d. False,
False
28.I. For purpose of the donor’s tax, second degree cousins are strangers to each other.
II. Encumbrance on the property donated, if assumed by the donor is deductible for
donor’s tax purposes.
a. True, True b. True, False c. False, True d. False,
False
29.I. As a rule, donation between husband and wife during the marriage is void.
II. Donation can be made to conceived or unborn children.
a. True, True b. True, False c. False, True d. False,
False
30.1st Statement: When the donee is a stranger, the tax payable by the donor shall be
30% of the net gifts.
2nd Statement: When the donee is a relative the tax payable by the donor shall be
based on the scheduler rates of donor’s tax provided in Section 99 of the Tax Code.
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is
correct
31.For purposes of donor’s tax, a “stranger: is a person who is not a:

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I – brother, sister (whether by whole of half blood), spouse, ancestor, and lineal
descendant; or
II – relative by consanguinity in the collateral line within the fifth degree of
relationship
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is
correct
32.1st Statement – A legally adopted child is entitled to all the rights and obligations
provided by law to legitimate children, and therefore, donation to him shall not be
considered as donation made to stranger
2nd Statement – Donation made between business organization and those made
between an individual and a business organization shall be considered as donation
made to a stranger
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is
correct
33.1st Statement – Any contributions in cash or in kind to any candidate, political party or
coalition of parties for campaign purposes, shall be governed by the Election Code, as
amended
2nd Statement – Any provision of law to the contrary notwithstanding, any contribution
in cash or in kind to any candidate or political party or coalition of parties for
campaign purposes duly reported to the COMELEC shall not be subject to the
payment of any gift tax
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is
correct
34.The donor’s tax is a
a. Property tax on the property transferred
b. Personal tax on the person who transferred the property
c. Tax imposed on the transfer of property by way of gift inter vivos
d. Tax imposed on the transfer of property by way of gift mortis causa
35.1st Statement – The donor’s tax shall not apply unless and until there is a completed
gift.
2nd Statement – The law in force at the time of the perfection/completion of the
donation shall govern the imposition of the donor’s tax
a. Both statements are correct
b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct
36.When is the donation perfected?
a. The moment the donor knows of the acceptance by the donee
b. The moment the donated property is delivered, either actually or constructively, to
the donee
c. Upon payment of the donor’s tax
d. Upon execution of the deed of donation
37.When is the donation completed?
a. The moment the donor knows of the acceptance by the donee
b. The moment the donated property is delivered, either actually or constructively, to
the donee
c. Upon payment of the donor’s tax
d. Upon execution of the deed of donation
38.A gift that is incomplete because of reserved powers, becomes complete when either:
I – the donor renounces the power; or
II – the right to exercise the reserved power ceases because of the happening of some
event or contingency or the fulfillment of some condition, other than because of the
donor’s death
a. True in both I and II c. True in I only
b. Not true in both I and II d. True in II only
39.Which of the following renunciations shall be subject to donor’s tax?
I – Renunciation by the surviving spouse of his/her share in the conjugal partnership
or absolute community after the dissolution of the marriage in favor of the heirs of the
deceased spouse or any other person/s

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II – General renunciation by an heir, including the surviving spouse, of his/her share in
the hereditary estate left by the decedent;
III – Renunciation by an heir, including the surviving spouse of his/her share in the
hereditary estate left by the decedent categorically in favor of identified heir/s to the
exclusion or disadvantage of the other co – heirs;
a. I, II and III c. I and III only
b. I and II only d. I only
40.1st Statement – Where property, other than a real property that has been subjected to
final capital gains tax, is transferred for less than an adequate and full consideration
in money or money’s worth, then the amount by which the fair market value of the
property at the time of the execution of the Contract to Sell or execution of the Deed
of Sale which is not preceded by a Contract to Sell exceeded the value of the agreed
or actual consideration or selling price shall be deemed a gift, and shall be included in
computing the amount of gifts made during the calendar year

2nd – The law in force at the time of the completion of the donation shall govern the
imposition of donor’s tax
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
41.1st Statement – Husband and wife are considered separate and distinct taxpayers for
purposes of the donor’s tax
2nd Statement – 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
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
42.1st Statement – Any person making a donation (whether direct or indirect), unless the
donation is specifically exempted under the Tax Code or other special laws, is
required, for every donation, to accomplish under oath a donor’s tax return
2nd Statement – The computation of the donor’s tax is on a cumulative basis over a
period of one calendar year.
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
43.Which of the following information shall be set forth in the donor’s tax return?
I – Each gift made during the calendar year which is to be included in computing net
gifts;
II – The deductions claimed and allowable
III – Any previous net gifts made during the same calendar year;
IV – The name of the donee;
V – Relation of the donor to the donee
VI – Such further information as the Commissioner require
a. All of the above c. I, II, III, and IV only
b. None of the above d. I, II and III only
44.The donor’s tax return shall be filed within
a. six (6) months after the date the gift is made
b. two (2) months after the date the gift is made or completed
c. thirty (30) days after the date the gift is made
d. thirty (30) days after the date the gift is made or completed
45.Unless the Commissioner otherwise permits, the donor’s tax return shall be filed and
the tax paid to the following where the donor was domiciled at the time of the transfer
I – Authorized Agent Bank
II – Revenue District Officer
III – Revenue Collection Officer
IV – Duly authorized Treasurer of the city or municipality
a. I, II, III and IV c. I and II only
b. I, II, III only d. I only
46.When the donor has no legal residence in the Philippines, the donor’s tax return shall
be file with
a. Authorized Agent Bank
b. Revenue District Officer where the donor is domiciled

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c. Revenue Collection Officer where the donee is domiciled
d. Office of the Commissioner
47.In order to be exempt from donor’s tax and to claim full deduction of the donation
given to qualified donee – institutions duly accredited by the Philippine Council for
NOG Certification, Inc. (PCNC):
I – The donor engaged in business shall give notice of donation on every donation
worth at least P50,000 to the RDO which has jurisdiction over his place of business;
II – The notice shall be given within thirty (30) days after the 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 thirty percent (30%) of the said
donations/ gifts for the taxable year shall be used by such donee – institution for
administration purposes
a. Yes to I and II c. Yes to I only
b. No to I and II d. Yes to II only

48 – 50 are based on the following: The following donations during the calendar year
2006 are made to relatives:
January 30, 2006 P2,000,000
March 30, 2006 1,000,000
August 15, 2006 500,000
48.How much is the tax due on the gift made on January30, 2006?
a. P204,000 b. P124,000 c. P80,000 d. P50,000
49.How much is the tax due on the gift made on March 30, 2006?
a. P204,000 b. P124,000 c. P80,000 d. P50,000
50.How much is the tax due on the gift made on August 15, 2006
a. P204,000 b. P124,000 c. P80,000 d. P50,000
51.On January 5, 2005, Daisy gave a piece of land to her brother – in – law who is getting
married on February 14, 2005. The assessed value and zonal value of the land were
P750,000 and P1,000,000 respectively. The land had an unpaid mortgage of P200,000,
which was not assumed by the donee and an unpaid realty tax of P10,000 which was
assumed by the donee. The brother – in – law agreed to pay the donor’s tax on the
donation which was roughly P297,000. How much was the donor’s tax due?
a. P297,000 b. P237,000 c. P43,400 d. P31,400

52 to 54 based on the following: Mr. Jose San Jose made the following cash donations to
his legitimate son, 18 years old, who got married on January 5, 2006:
Date of donation Amount
December 23, 2005 P5,000
January 5, 2006 3,000
January 5, 2007 10,000
52.How much was the exempt dowry on the gift made on December 23, 2005?
a. P10,000 b. P8,000 c. P5,000 d. None
53.How much was the exempt dowry on the gift made on January 5, 2006?
a. P10,000 b. P8,000 c. P5,000 d. P3,000
54.How much was the exempt dowry on the gift made on January 5, 2007?
a. P10,000 b. P8,000 c. P5,000 d. P2,000
55.Mr. Oscar Azucar donated the following cash donations to his legally adopted
daughter, 30 years old, who got married on June 10, 2006:
Date of Donation Amount
June 10, 2006 P 6,000
August 11, 2006 4,000
October 10, 2006 5,000
How much was the exempt dowry on the gift made on October 10, 2006?
56.Mr. Paolo Sao Paolo donated P50,000 cash to his favorite grandson who is getting
married on June 16, 2007. For donor’s tax purposes the exempt dowry shall be:
a. P50,000 b. P10,000 c. P5,000 d. None
57.Mr. Pantaleon de Leon donated a piece of land to his best friend , German La
Germania. The land had an assessed value of P800,000 and zonal value of P1,000,000
at the time of donation. It is also encumbered with an unpaid mortgage of P300,000
which shall be assumed by the donee. In addition, the donee agreed to pay the

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Driven for real excellence! TAX by Rex B. Banggawan, CPA, MBA TAX – 4th Batch – HQ11-2
Northern CPAR: Taxation – Donor’s Taxation
applicable donor’s tax of P210,000. For donor’s tax purposes, how much shall be the
total deductions?
a. P510,000 b. P300,000 c. P210,000 d. None
58.Mr. Nguyen Gandaipen, non – resident alien, donated a brand new car valued at
P1,200,000 to his legitimate son who is getting married in the Philippines. The son
agreed to pay unpaid tax of P120,000 on the car. For Philippine donor’s tax of
P210,000. For donor’s tax purposes, how much shall be the total deductions?
a. P130,000 b. 120,000 c. 10,000 d. None
59.Mr. George Jorge donated P500,000 to the City of Manila and P100,000 to his best
friend who graduated summa cum laude. For donor’s tax purposes how much shall be
the:
Gross Deducti
gifts ons
a P600,00
. 0 P500,000
b P500,00
. 0 P500,000
c P600,00
. 0 P100,000
d P500,00
. 0 P100,000
60.Ms. Josie Pruitt makes the following gifts in the year 2007:
 June 6, 2007 – P50,000 to Jaimee, acknowledge natural daughter on account of her
marriage celebrated on June 8, 2006
 August 11, 2007 – A piece of jewelry purchased by Ms. Pruitt for P100,000 (but
with a fair market value of P150,000 at the time of donation) given to her husband
 October 12, 2007 – P50,000 to Maritz, her legitimate daughter, on account of her
marriage on December 25, 2006
 December 25, 2007 – P20,000 cash donation to a non- profit philanthropic
organization
The total taxable net gifts of Ms. Pruitt as of December 25, 2007 are:
a. P200,000 b. P140,000 c. P90,000 d. P80,000
61.In 2007, Jose made the following gifts:
1. On June 1, 2007, P150,000 to Anton, his son, on account of his marriage celebrated
May 1, 2006
2. On July 10, 2007, a parcel of land worth P180,000 to his father, subject to the
condition, that his father would assume the mortgage indebtedness of Jose in the
amount of P40,000
3. On September 30, 2007, P150,000 dowry to his daughter Dana, on account of her
scheduled marriage on October 25, 2007, and another wedding gift worth P20,000
on November 23, 2007
How much is the total net gifts?
a. P500,000 b. P460,000 c. P450,000 d. P430,000

62.On January 5, 2004, Emma Crema, resident donor, made the following donations:
 To Crispina, recognized natural child, on account of forthcoming marriage, land in
the Philippines valued at P310,000
 To Francisco, legitimate son, car in San Diego, California, USA valued at P500,000
(donor’s tax paid in USA, P20,000)
For Philippine donor’s tax purposes, the donor’s tax due shall be:
a. P32,000 b. P20,000 c. P12,000 d. None
63.Mr. James Jayme, non – resident citizen donor, made the following donations on July
15, 2007:
 To Charles, a legally adopted child, on account of marriage on July 31, 2007,
property in Indonesia (donor’s tax paid in Indonesia, P70,000), fair market value,
P510,000
 To Adjanto, best friend in the Philippines, a property with an unpaid mortgage of
P30,000 assumed by the donee, fair market value, P230,000

10
Driven for real excellence! TAX by Rex B. Banggawan, CPA, MBA TAX – 4th Batch – HQ11-2
Northern CPAR: Taxation – Donor’s Taxation
For Philippine donor’s tax purposes the allowable tax credit is
a. P74,000 b. P70,000 c. P52,857 d. None
64.H made a donation of property with a FMV of P1,000,000 to his legitimate daughter I
and to J on December 25, 2006 on account of I’s marriage to J to be celebrated on
February 14, 2007.
Required: Determine the donor’s tax due.
65.Mr. and Mrs K made the following donations of conjugal funds and properties in 2006
(unless stated otherwise) as follows:
a. February 14: To L, a legitimate son, a pie of land with FMV of P400,000 on account
of L’s graduation from college
b. May 14: To M, a legitimate daughter on account of M’s marriage to be celebrated
on December 25, 2006 house and lot with BMV of P1,000,000
c. June 14: To N, brother of Mrs. K, P200,000
d. September 14: To O, the efficient and beautiful secretary of Mr. K for taking care of
Mr. K while Mrs. K is vacationing in USA, jewelry worth P300,000
e. 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 diamond ring worth P500,000
f. December 14: To Q, the daughter of O on account of Q’s birthday, pieces of jewelry
inherited by Mr. K during marriage, with a FMV of P400,000
g. 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.

Required: Determine the donor’s tax due on each donation

66.S, made the following donations in 2007:
a. February 14: To T, a legitimate son on account of T’s graduation, P150,000
b. April 14: To U, an acknowledge natural child on account of U’s forthcoming
marriage on January 14, 2008, P7,000
c. May 14: To V, a legitimate daughter on account of V’s marriage celebrated on June
14, 2006, P8,000
d. July 14: To T, on Account of T’s marriage on Jan 14, 2007, P100,000
e. October 14: To U, additional gift on account of U’s marriage on Jan 14, 2008,
P93,000
f. December 14: To V, additional gift on account of V’s marriage on June 14, 2006,
P92,000
Required: Determine the donor’s tax due on each donation
67.W, a resident citizen, made the following donations in 2007
a. Feb 14: To X, a legitimate son, on account of X’s marriage celebrated on December
14, 2006, P180,000
b. June 14: To Y, a legitimate daughter, on account of Y’s marriage on June 14, 2007,
P200,000
c. October 14: To Z, a legitimate daughter, on account of Z’s marriage on July 14,
2005 a residential land in USA with a FMV of P400,000. (Mr. W paid P25,000 to
the US government as donor’s tax)
Required: Determine the donor’s tax due after the tax credit

68.Mr. A, a Filipino citizen made the following gifts to his children for calendar year
2005:
Phil USA Canada Australia
Net Gift P350,000 P300,000 P250,000 P100,000
Donor’s tax paid 15,000 10,000 5,000
Required: Compute the donor’s tax still due after tax credit

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Driven for real excellence! TAX by Rex B. Banggawan, CPA, MBA TAX – 4th Batch – HQ11-2