Donors-tax-reviewer - BLT PDF

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DONOR’S TAX REVIEWER An act of liberality whereby a person disposes gratuitously of a thing or right in favor of another who accepts it. a. Succession c. inheritance b. donation d. liquidation When the donor intends that the donation shall take effect during the lifetime of the donor, though the pro...

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DONOR’S TAX REVIEWER 1. An act of liberality whereby a person disposes gratuitously of a thing or right in favor of another who accepts it. a. Succession c. inheritance d. liquidation b. donation 2. When the donor intends that the donation shall take effect during the lifetime of the donor, though the property shall be delivered till after the donor’s death, this shall be a a. Donation mortis causa b. Donation inter vivos c. Donation propter nuptias d. None of the above 3. When is the donation period perfected? a. The moment the donor knows of the acceptance by the donee. b. The moment the thing donated 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. 4. The following are the requisites of a donation for purposes of the donor’s tax, except one: a. Capacity of the donor. b. Capacity of the donee. c. Delivery of the subject matter or gift. d. Donative intent. 5. For the donation to be considered valid, acceptance of the donation must be made a. During the lifetime of the donor only. b. During the lifetime of the donee only. c. During the lifetime of the donor and the donee. d. None of the choices. 6. Which of the following donations inter vivos may not require that it be made in writing? a. Donation of personal (movable) property, the value of which exceeds P5,000. b. Donation of personal (movable) property, the value of which is P5,000. c. Donation of real (immovable) property, the value of which is less than P5,000. d. Donation of real (immovable) property, the value of which exceeds P5,000. 7. Which of the following statements regarding donation of an immovable property is incorrect? a. The donation must be made in a public document specifying therein the property donated and the value of the charges which the donee must satisfy. b. The acceptance may be made in the same Deed of Donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor. c. If the acceptance is made in a separate instrument, the donor shall be noted in both instruments. d. None of the choices. 8. One of the following is not a distinction between donation inter vivos and donation mortis cause. a. Donation inter vivos takes effect during the lifetime of the grantor while donation mortis cause takes effect afte the death of the grantor. b. Donation inter vivos is subject to donor’s tax while donation mortis causa is subject to estate tax. c. Donation inter vivos requires a public document while donation mortis causa may not require a public document. d. Donation inter vivos is valued at fair market value at the time the property is given while donation mortis causa is valued at the fair market value at the time of the death of the grantor.

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Motivated by love, Mr M donated a car to his brother, Mr. N and Mr. O, the naked title of Mr. P and usufruct to Mr.Q for one year. Is the transfer of the car, naked title to Mr. P and usufruct to Mr. O a vadie donation? a. Yes, the transfer of the naked title to P and usufruct to O is valid donation, provided all the donees are living at the time of donation. b. No, the donation is not valid because it is specifically provided in the Civil Code that such donation is not allowed. c. Yes, the donation is valid provided that Mr. N agrees to the donation of usufruct to Mr. Q. d. No, the donation is not valid because the right (usufruct) cannot be donated. 10. Which of the following is a stranger for donor’s tax purposes? a. The son of the donor’s first cousin. b. The donor’s grandmother. c. The donor’s spouse d. The child born out of wedlock of parents who are legally impeded to marry each other at the time the child is being conceived. 11. Mr. Pedro Paterno died and was survived by his wife and two (2) children, Fame and Fare. After getting married her share in the conjugal property, the surviving spouse renounce her share in the hereditary estate in favor of Fame to the exclusion of Fare. Was the renunciation subject to donor’s tax? a. Yes, because the renunciation as made categorically in favor of identified heir to the exclusion or disadvantage of the other co-heirs. b. No, because the renunciation was considered a general renunciation. c. Yes, because, as a rule, renunciation of share in the hereditary estate is always subject to donor’s tax. d. No, because, as a rule, the surviving spouse cannot renounce her share in the hereditary estate. 12. Jose sold his car to Samuel for P200,000. Jose’s car cost P500,000 and had a fair value of P400,000 at the time of sale. What was the consequence of the sale? a. There was a taxable give of P300,000. b. There was a taxable gift of P200,000. c. The transfer was for insufficient consideration, hence, not subject to donor’s tax. d. The transfer involved a personal property, hence, not subject to donor’s tax. 13. Statement I – A transfer is gratuitous or without consideration and accordingly qualifies as a donation, if not economic benefit measurable in money or money’s worth flowed to the transferor from the transferee. Statement II – a gratuitous transfer is always subject to donor’s tax. a. True, true b. False, false c. True, false d. False, true. 14. The common characteristic of transfer taxes is the transfer of property: a. Is onerous b. Takes effect during the lifetime of the transferor. c. Takes effect upon the death of the transferor. d. Is gratuitous. 15. When the indebtedness is cancelled without any service rendered by the debtor in favor of the creditor, the forgiveness of debt will result to: a. Taxable income

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b. Distribution of dividend. c. Taxable indirect donation. d. Taxable estate. Which of the following examples is not taxable? a. A Filipino citizen donated a parcel of land located in the United States to B, non-resident alien. b. On June 1, 2001, A made a gift of P200,000 to his daughter on account of her marriage celebrated on May 1, 2000. c. Mr. Ramos gives his girlfriend a diamond ring worth P100,000 as a birthday gift. d. A and B are the only heirs of C. A renounces his share of inheritance in favor of B. A non –resident donor is taxed on his donation of properties: a. Situated in the Philippines only. b. Wherever situated. c. Situated outside the Philippines only. d. Situated in the Philippines only subject to the rule of reciprocity. The rule of reciprocity that applies to estate tax also applies to: I – non-resident alien donor II- intangible personal property situated in the Philippines. a. Both I and II are correct. b. Both I and II are incorrect. c. Only I is correct. d. Only II is correct. The donor is a non-resident, not a citizen of the Philippines. Which of the following statements is incorrect? a. Property situated outside the Philippines donated to a citizen of the Philippines will not be subject to Philippine donor’s tax. b. Property situated outside the Philippines and donated to a donee who resides outside the Philippines is not subject to Philippine donor’s tax. c. Property situated in the Philippines donated to a legitimate child on account of marriage will be entitled to the P10,000 dowry exemption. d. Property situated in the Philippines with a fair market value of P150,000 and donated to a citizen of the Philippines will be subject to Philippine donor’s tax. Dowries or gifts made on account of marriage of children shall be exempt from donor’s tax if given by parents: I – before its celebration II – within one year thereafter a. Both I and II are correct. b. Neither I nor II is correct. c. Only I is correct. d. Only II is correct. Reference: section 101 A, NIRC. As amended under section 30, TRAIN The amount of the exempt dowry is to the extent of the first: a. P32,000 c. P10,000

b. P25,000 d. none 22. When the done or beneficiary is a relative or a stranger, the tax payable by the donor shall be: a. Six percent (6%) of the total gifts. b. Thirty percent (30%) of the gross gifts. c. Thirty percent (30%) of the net gifts in excess of P100,000, d. Forty percent (40%) of the net gifts. 23. The spouses Criselda and Kardo wanted to donate a parcel of land to their daughter Myrna who is getting married in December 2018. The parcel of land has a zonal valuation of P420,000. You are consulted as to how should they make the donation to save on donor’s tax. What advice will you give them? a. They should first donate in 2017 a portion of the property valued at P20,000 then spread the P400,000 equally for 2018, 2019, 2020 and 2021. b. They should spread the donation over a period of 5 years by the spouses donation P100,000 each year from 2018 to 2022. c. They should each donate a P105,000 portion of the value of the property in 2018 then each should donate P105,000 in 2019. d. They should each donate a P100,000 portion of the value of the property in 2018, and another P100,000 each in 2019. Then, in 2018, Criselda should donate the remaining P20,000. 24. Pat donated P110,000 to her friend Kim who was getting married. Pat gave no other gift during the calendar year. What is the donor’s tax implication on Pat’s donation? a. The P100,000 portion of the donation is exempt since given in consideration of marriage. b. A P10,000 portion of the donation is exempt being a donation in consideration of marriage. c. Pat shall pay a 6% donor’s tax on the P110,000 donation. d. The P110,000 donation is exempt from donor’s tax. 25. The following donations during the calendar year 2018 are made to relatives: Date

Amount204,

March 30, 2018 1,000,000 August 15, 2018 500,000 26. How much is the tax due on the gift made on January 30, 3018? a. P204,000 c. P80,000 d. P50,000 b. P105,000 Jan 30, 2018: taxable net gift P2,000,000 Tax due and payable P250,000 exempt 1,750,000 X 6% P105,000 27. How much is the tax due on the gift made on March 30, 2018? a. P204,000 c. P60,000 b. P124,000 d. P50,000 March 30, 2018: Gift Add: previous net gift

P1,000,000 2,000,000

Total taxable gifts P3,000,000 Tax due P250,000 EXEMPT P2,750,000 x 6% P165,000 Less: tax paid prior gift 105,000 Taxes payable P60,000 28. How much is the tax due on the gift made on August 15, 2018? a. P204,000 c. P80,000 b. P124,000 d. P30,000 29. On January 1, 2018, Demmy gave a piece of land to her brother in law who is getting married on February 14, 2018. 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 done and an unpaid realty tax of P10,000 which was assumed by the done. What value hall be reflected in the gross gift? a. P1,000,000 c. P750,000 b. P800,000 d. none of the choices. 30. Based on no. 29, how much shall be the total deductions? a. P210,000 c. P10,000 b. P200,000 d. none of the choices. 31. Based on no. 29, how much was the donor’s tax due? a. P297,000 c. P44,400 b. P237,000 d. 31,400 Gross gift P 1,000,000 Less: unpaid tax assumed by done 10,000 Taxable net gift P 990,000 Tax due and payable P250,000 EXEMPT P750,000 X 6% P44,400 32. Based on information no. 29, when shall be the due date for the filing of donor’s tax? a. February 14, 2018 c. March 15, 2018 b. February 15, 2018 d. July 15, 2018 33. On June 10, 2018, Mr. Pablo Sacro donated P50,000 cash to his favorite grandson who is getting married on June 16, 2018. For donor’s tax purposes, the exempt dowry shall be: a. P50,000 c. P5,000 b. P10,000 d. none 34. On March 1, 2018, Mr. Pedro de Leon donated a piece of land to his best friend, Gerson Rocero. He also donated to a non-profit religious organization. The donation to his friend was a piece of land which had an assessed value of P1,000,000 and zonal value of P800,000 at the time of donation. The donation to a non-profit religious organization were cash amounting to P200,000 and an automobile with a purchase price of P700,000. The piece of land was encumbered with an unpaid mortgage of P300,000 which was assumed by the done. In addition, the done agree to pay the applicable donor’s tax of P210,000. How much should be included in the gross gifts? a. P1,900,000 c. P1,000,000 b. P1,700,000 d. none of the choices Piece of land, assessed value (higher) P1,000,000 Automobile (purchase price) 700,000 Cash 200,000 Total gross gifts P1,900,000 35. Based on information no. 34, how much was the total deductions?

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a. P1,410,000 c. P510,000 d. none of the choices b. P1,200,000 Gifts for a non-profit religious organization P900,000 Unpaid mortgage assumed by the done 300,000 Total deductions P1,200,000 Based on information no. 34, what were the taxable gifts? a. P700,000 c. P290,000 b. P490,000 d. none of the choices. Gross gifts P1,900,000 Less deductions 1,200,000 Taxable net gifts P 700,000 Based on information no. 34, how many donor’s tax returns should be filed? a. Three c. one b. Two d. as many as possible Based on information no. 34, would notice of donation be required on these donation? a. Yes, on all donations. b. Yes, but only on donation made to a religious organization. c. No, on all donations. d. No, notice of donation is not required for donor’s tax. Ms. Josie Pinto, a resident donor, made the following gifts in the year 2018: Date June 6, 2018

Donations P50,000 to Jaimee, an illegitimate daughter on account of her marriage celebrated on June 8, 2018. August 11, 2018 A piece of jewelry purchased by Ms. Pinto for P100,000 (but ith a fair market value of P150,000 at the time of donation) given to her husband. October 12, 2018 P50,000 to Maritz, her legitimate daughter, on account of her marriage on December 25, 2017. December 25, 2018 P20,000 cash donation to a non-profit philanthropic organization. The taxable gift of Ms. Pinto on June 6, 2018 was: c. none, not subject to donor’s tax a. P50,000 b. P40,000 d. none of the choices Gross gift P50,000 Less: deduction Taxable gift P50,000 40. Based on information no. 39, the amount of taxable gift made on August 11, 2018 was: a. P150,000 c. none, not subject to donor’s tax d. none of the choices. b. P100,000 41. Based on information no. 39, the total taxable gifts of Ms. Pinto as of October 12, 2018 were: c. P40,000 a. P100,000 b. P90,000 d. none of the choices Gross gift, October 12, 2018 P 50,000 Add: prior gift, June 6, 2018 50,000 Total taxable gift P100,000

42. Based on information no. 39, the total taxable gifts of Ms. Pinto as of December 25, 2018 were: a. P200,000 c. P100,000 b. P140,000 d. none of the choices Gross gift, December 25, 2018 P20,000 Less: donation to philanthropic organization 20,000 Net gift P 0.00 Add: prior gift P100,000 Total taxable gift P100,000 43. On January 5, 2018, Emma Rodil, resident donor, made the following donations: a. To Cristina, recognized natural child, land in the Philippines valued at P310,000, on account of her forthcoming marriage; b. To Francisco, legitimate son, car in San Diego, California, USA valued at P500,000 (donor’s tax paid in USA, P20,000). The Philippine donor’s tax purposes, the donor’s tax due after tax credit shall be: a. P32,000 c. P13,600 b. P20,000 d. none Gross gift To Cristina P310,000 To Francisco 500,000 Total taxable gift P810,000 Tax due P250,000 EXEMPT P560,000 x 6% P33,600 Less: tax credit for foreign donor’s tax Actual foreign donor’s tax P20,000 Limit (P500,000/810,000) xP33,600 P20,741 20,000 Tax payable P 13,600 44. Michelle is a citizen and resident of the Philippines. On July 8, 2018, she made donations to Yoly, a friend, of properties in Australia and Thailand. Donor’s taxes paid in Australia and USA amounted to P20,000 and P5,000 respectively. The property in Australia had a fair market value of P300,000 while the property in US had a market value of P200,000. How much was the donor’s tax still due after credit for foreign donor’s taxes? a. P15,000 c. P1,000 b. P14,000 d. P0.0 Net gift, Australia Net gift, USA Taxable net gifts

P300,000 200,000 P500,000

Tax due ((P500,000-P250,000)x 6% Less: tax credit foreign donor’s tax Tax payable

P 15,000 14,000 P 1,000

Tax credit

limit

actual

Limit A by country Australia (P300,000/500,000) x P15,000 P9,000 USA (P200,000/500,000) x P15,000 P 6,000 5,000 Total Limit B by total (P500,000/500,000) x P15,000 P15,000 Allowed (lower between limit a and Limit b)

allowed

P20,000

P 9,000

P5,000 P14,000 P25,000

P 15,000 P14,000

45. Mr. Jerry Yan, non-resident citizen donor, made the following donations on July 15, 2018; a. To Cherry, a legally adopted child, on account of his marriage on July 31, 2018, a property in Indonesia (donor’s tax paid in Indonesia, P70,000), fair market value, P510,000; b. To Adrian, best friend in the Philippines, a property with an unpaid mortgage of P30,000 assumed by the donee, fair market value, P230,000. For Philippine donor’s tax purposes, the allowable tax credit is: a. P74,000 b. P70,000

c. P52,857 d. P19,714.

Gross gift Less: mortgage assumed by done Taxable net gift Tax due P250,000 460,000 x 6% Donor’s tax credit Actual foreign donor’s tax Limit (P500,000/700,000) x P27,600

Stranger Adrian P230,000 ( 30,000) P200,000

Relative Cherry P510,000 P510,000 exempt P 27,600 P70,000 P19,714

Allowed (lower) P19,714 46. A resident citizen has a property in Quezon City. His legal resident is in Masbate City. While in Cebu City on a business trip, he donated his property in Quezon City to a relative who is long-time resident in Cebu city. Where will the donor file the donor’s tax return? a. Quezon city c. Masbate city b. Cebu city d. any of the three cities. 47. Statement I – in order for donation to be exempt from donor’s tax and claimed in full as deduction, the done-institution must be duly accredited by the Philippine Council for NGO certification (PCNC).

Statement II - the donor engaged in business shall give a notice of donation on every donation worth at least P50,000 to the Revenue District Office, which has jurisdiction over his place of business within 30 days after receipt of the qualified done-institution’s duly issued Certificate of Donation. a. True, true c. true, false b. False, false d. false, true 48. When the donor has no legal residence in the Philippines, the donor’s tax return shall be filed with the: a. Authorized agent bank. b. Revenue district officer where the donor is domiciled. c. Revenue collection officer where the done is domiciled. d. Office of the Commissioner. 49. Which proof of valuation is valid for donor’s tax purposes? I – for listed stocks - newspaper clippings/certification issued by the Stock Exchange as to the value of the share. II – for unlisted stocks – latest audited Financial Statements of the issuing corporation with computation of the book value per share. a. I only c. neither I nor II b. II only d. both I and II. 50. Statement I – a separate return shall be filed by each donor for each gift or donation made on different dates during the year reflecting therein any previous net gifts made in the same calendar year. Statement II – only one return shall be filed for seferal gift or donation by a donor of the different donees on the same date. c. true, false a. True, true b. False, false d. false, true...