TAKEHOME SEATWORK DONORS TAX

TO BE SUBMITTED ON TUESDAY MARCH 17, 2020

½ CROSSWISE

Multiple Choice: Choose the best possible answer.

1. 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

2. The amount of the exempt dowry is to the extent of the first:

a. P 32,000.
b. P25,000.
c. P10,000.
d. None.

3. Which of the following gifts or donations shall be exempt from donor's tax?

I - Those made to or for the use of the National Government or any entity created by its
agencies which is not conducted for profit
II - Those made to any political subdivision of the Government

a. I only
b. II only
c. Both I and II
d. Neither I nor II

4. (Phil Bar Modified) AST Corporation donated a piece of land to the Municipality of
Palanas, Masbate Province for the relocation site of informal settlers. The municipal
government subdivided the property and awarded parcels to the settlers. Houses were
also built by the municipal government on the property.

Question 1 - Was the donation by AST Corporation exempt from donor's tax?
Question 2 - Was the awarding of parcels of land to the settlers exempt from donor's
tax?

a. Yes to both questions.

b. No to both questions.
c. Yes to first question and No to second question.
d. No to first question and Yes to second question.

5. LA Corporation donated P1,000,000 to a government agency which was created to

generate profit to the government. The agency's total expenses amounted to
P15,000,000, 30% of which were for
a. P4,500,000
b. P3,000,000
c. P1,000,000 administrative purposes? How much was the exempt gift?
d. None of the choices

6. First statement: Transfers inter vivos in favor of non-profit educational institutions are
exempt from donor's tax.
Second statement: Transfers mortis causa in favor of non-profit educational institutions
are exempt from estate tax.

a. True, True
b. False, False
c. True, False
d. False, True

7. Mr. J. Cruz donated P200,000 to a religious institution. During the year, the total
receipts from donations of the religious institution was P5,000,000. Its total
administrative expenses amounted to P2,000,000. How much was the exempt gift to the
religious institution?

a. Zero
b. P10,000
c. P100,000
d. P200,000

Answer: A
The gift was not exempted because the administrative expenses of the donee-institution
exceeded 30% of the total expenses (P2,000,000/P5,000,000 - 40%).

8. Mr. J. Santos donated P500,000 to AST Foundation, a philanthropic organization.

The organizations total administrative expenses amounted to P5,000,000 out of its
expenses of P20,000,000. How much was the exempt gift to the philanthropic
organization?

a. P6,000,000
b. P5,000,000
c. P500,000
d. None
9. Since donation to a charitable institution has no ceiling as a Since a deduction for
donor's tax purposes,

1st statement: The net gift will be zero, so that in computing the donor's tax, the
donation may be omitted in gross gifts if it islikewise omitted in deductions.
2nd statement: The gross gifts shall be reported and the deduction shall be claimed.

a. Both statements are true.

b. Both statements are false.
c. First statement is true while second statement is false,
d. First statement is false while second statement is true.

10. One of the following is not an exempt gift or a deduction from the gross gift of a non-
resident alien donor:

a. Dowries or gifts made on account of marriage

b. Gifts made to or for the use of the National Government or to
any of its political subdivision
c. Gifts in favor of an educational and/or charitable, religious,
cultural or social welfare corporation, institution, accredited non-government
organization, trust or philanthropic
organization or research institution or organization
d. Encumbrance on the property donated, if assumed by the done

11. A married non-resident alien donates shares of stock valued at P300,000 to his son
who is getting married to a Filipina in the Philippines. Assuming there is reciprocity, how
much is the glass gift and the exempt dowry?

Gross Gift Dowry

a. P300,000 P 10,000
b. P300,000 Zero
c. P150,000 Zero
d. Zero Zero

12. Which of the following is not a deduction from the gross gifts?

a. Unpaid mortgage on the donated property assumed by the donee

b. Unpaid real estate tax on the property donated assumed by the donee
c. Diminution on the donated property specifically provided by the donor
d. Unpaid donor's tax on the donated property assumed by the done
The following are not found in the Tax Code but are nevertheless allowed as deductions
from gross gifts:
a. Encumbrance on the property donated if assumed by the donee;
b. Those specifically provided by the donor as a diminution from the property donated

13. Which of the following is a taxable gift?

a. Donations to the Intramuros Administration

b. Donations to the Community Chest
c. Donations to the Philippine Institute of Certified Public Accountants .
d. Donations to International Rice Research Institute

14. (Phil. CPA Modified). the following are exempt from the donor's tax. Which is the
exception?

a. P200,000 cash given by a non-resident alien donor to his legitimate son who is
getting married in the Philippines to a Filipina.
b. Donation of a condominium in Hongkong to a Filipina by a
British national not residing in the Philippines.
c. P150,000 donation to a non-profit school.
d. None of the choices.

15. A resident citizen of the Philippines made the following donations on one date:
Donations on account of marriage: P100,000
To legitimate son 15,000
To a legitimate daughter and her 30,000
husband-to-be, on account of marriage 60,000
To a recognized natural son 12,000
To an adopted child 40,000
To an illegitimate daughter To a sister 20,000
To a charitable institution The deductions from gross gift P20,000.

The deduction from gross gift is?

a. P67,500
b. P60,000.
c. P57,500.
d. P20,000
16. When the donee 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
P100,000.00
d. Forty percent (40%) of the net gifts.

17. When the donee or beneficiary is a relative, the tax payable by the donor shall be
based:

a. on the schedular rates ranging from 2% to 15% provided in Section 99 of the Tax
Code based on gross gifts.
b. on the schedular rates ranging from 2% to 15% provided in Section 99 of the Tax
Code based on net gifts.
c. A flat rate of 30% based on net gifts.
d. A flat rate of 30% based on gross gifts.

18. When the donee is not a stranger, how much is the exempted gift?

a. P500,000
b. P250,000
c. P100,000
d. None

19. When the donee is a stranger, how much is the exempted gift?
a. P500,000
b. P250,000
c. P100,000
d. None

20. Your bachelor client, a Filipino residing in Quezon City, wants to give his sister a
gift of P500,000 in 2018. He seeks your advice for purposes of reducing, if not
eliminating, the donor's tax on the gift. What advice will you give him?

a. Split the gifts into two - the first P250,000 gift to be given on December 25, 2018 and
the other P250,000 to be given on January 2, 2019 - both gifts will be exempted from
donor's tax.
b. Give the full gift of P500,000 in 2018 and tell his sister not to
tell anyone that she receives a gift because the BIR will not know that the gift is made to
her.
c. Wait until his sister gets married and give the gift as a dowry so that he can deduct
P10,000 from the gross gift, thereby, reducing his taxable net gift.
d. Advice his sister to go abroad with him and give the gift while they are outside the
country.
21. The spouses Chris and Kathleen wanted to donate a parcel of land to their
daughter Myles who is getting married in December, 2018 The parcel of land has a
zonal valuation of P420,000.00. 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 P20,000.00 then
spread the P400.000,00 equally for 2018, 2019, 2020 and 2021.
b. They should spread the donation over a period of 5 years by the spouses donating
P100,000.00 each year from 2018 to 2022.
c. They should each donate a P105,000.00 portion of the value of
the property in 2018 then each should donate P105,000.00 in
2019.
d. They should each donate a P100,000.00 portion of the value of the property in 2018,
and another P100,000.00 each in 2019. Then, in 2018, Kathleen should donate the
remaining P20,000.00

22. First statement: The computation of the donor's tax is on a cumulative basis over a
period of one calendar year.
Second statement: Husband and wife are considered as separate and distinct
taxpayers for purposes 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.

23. Patricia donated P110,000.00 to her friend Kimberly who was getting married.
Patricia gave no one year. What is the donor's tax implication on Patricia's donation?

a. The P100,000.00 portion of the donation is exempt since given in consideration of

marriage.
b. A P10,000.00 portion of the donation is exempt being a donation in consideration of
marriage.
c. Patricia shall pay a 6% donor's tax on the P110,000.00 donation.
d. The P110,000.00 donation is exempt from donor's tax.

24. Which of the following statements is wrong? The donor's tax:

a. is computed on the basis of the net gifts of a calendar year.
b. becomes proportionately bigger on later donations.
C. is computed separately for each spouse in case of a joint donation.
d. is computed and paid within thirty (30) days from the date of donation.
25. On one date, Lara made donations of property in the Philippines to
a non-stranger, and of property outside the Philippines to a stranger. In taking a credit
for the foreign donor's tax paid, the credit shall be against the Philippine donor's tax on
the:

a. donation to the non-stranger plus that to the stranger.

b. donation to the non-stranger.
c. donation to the stranger.
d. none of the options given.

26. The donor's tax shall apply whether:

I- the transfer is in trust or otherwise
II - the gift is direct or indirect
III - the property is real or personal, tangible or intangible

a. Only I is true.
b. Only I and II are true.
c. Both I and II are true.
d. I, II and II are true.

27. The transfer by Mr. San Jose is subject to donor's tax while the rentals accruing to
Mrs. San Jose is exempt from income tax asproperty acquired by gift.
b. The transfer by Mr. San Jose is subject to donor's tax while the rentals accruing to
Mrs. San Jose is subject to income ta
c. The transfer by Mr. San Jose is not subject to donor's tax but the rentals accruing to
Mrs. San Jose is subject to donor's tax being the nature o usufruct.
d. The transfer of the apartment to the trustee is subject to estate tax upon the death of
Mr. San Jose.
Answer: B References: Sec. 98 (B) NIRC of 1997 as amended
Sec. 60 (4) (4) NIRC of 1997 as amended
28. A client asked you whether or not to add the gifts made in the previous months to
the gifts made in the current month of the same calendar year. What would your answer
be?
a. The gifts made in the previous months should not be added to the gifts made in the
current month because the computation of the taxable net gifts is on a per gift basis
over a period of one calendar year.
b. The gifts made in the previous month should be added to the gifts made in the
current month because the computation of the taxable net gifts is cumulative basis over
a period of one calendar quarter.
c. The gifts made in the previous months should not be added to the gifts made in the
current month because the BIR would have no way of knowing them anyway.
d. The gifts made in the previous months should be added to the gifts made in the
current month because the computation of the donor's tax on a cumulative basis over a
period of one calendar year

29. A client asked you whether or not to add the gifts made in the previous year to the
gifts made in the current year. What would your answer be?

a. The gifts made in the previous year should not be added to the gifts made in the
current year because the computation of the taxable net gifts is cumulative basis over a
period of one calendar year.
b. The gifts made in the previous year should be added to the gifts made in the current
year because the computation of the taxable net gifts is cumulative basis over several
calendar years.
c. The gifts made in the previous year should not be added to the gifts made in the
current year because the BIR would have
no way of knowing them anyway.
d. The gifts made in the previous year should be added to the gifts made in the current
year so that the progressive effect of donor's tax will be felt.

30. The computation of the donor's tax is on a cumulative basis over a period of:

a. one calendar year.

b. one fiscal year.
c. one calendar year or fiscal year, as the case may be
d. one taxable year.
31. First statement: Any person making a donation (whether direct or indirect), is
required to accomplish under oath a donor's tax return for every donation, unless the
donation is specifically exempted under the Tax Code or other special laws.
Second 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.

b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct.

32. 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 - Such further information as the Commissioner may require.

a. All of the above

b. None on the above
c. I, II, III and IV only
d . I, II and III only

33. The donor's tax return shall be filed and the tax due paid within how
many days after the date the donation was made or completed?

a. 60 days
b. 40 days
c. 30 days
d. 10 days
34. Mr. Gerardo Ireneo transfers inter vivos a personal property to his son on March 15,
2018. His son who lives in another province let his father know that he is accepting the
gift on March 31, 2018. The personal property was delivered and received on April 15.
2018. When shall be the last day to file the donor's tax return and pay the donor's tax to
avoid penalties?
a. April 14, 2018
b. April 30, 2018
c. May 15, 2018
d. None of the choices

35. The donation was made on June 10, 2018. The donee accepted the donation on
June 20, 2018 and was made known to the donor on the same day. The donated
property was delivered by the donor to the donee on July 1, 2018. When shall be the
last day to file donor's tax return and the pay the tax to avoid penalties?
a. July 10, 2018
b. July 20, 2018
c. July 31, 201
d. January 1, 2019

36. First statement: A donation with an unpaid donor's tax is not a valid
donation.
Second statement: The title to the donated real property cannot be
transferred to the donee in the Register of Deeds unless the donor's tax on the donation
had been paid.
a. True, True
b. False, False
c. True, False
d. False, True

37. A resident citizen has a property in Quezon City. His legal residence
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 of Cebu City. Where will the donor
file the donor's tax return?

a. Quezon City
b. Cebu City
c. Masbate City
d. Any of the three cities

38. Mr. Santiago Eclarinal, engaged in business, donated P50,000 to a qualified done-
institution duly accredited by the Philippine Council for NGO Certification, Inc. (PCNC).
He failed to give a notice of donation to the Revenue District Office (RDO) which has
jurisdiction over his place of business within thirty (30) days after receipt of the qualified
done-institution's duly issued Certificate of Donation. He approached you to ask whether
or not he can claim full deduction of the donation. What will your answer be?
a. Yes, he can claim full deduction of the donation because all
donations given to qualified-donee institution are deductible
in full
b. No, he cannot claim full deduction because of his failure to
give notice of donation to the Revenue District Office which
has jurisdiction over his place of business.
c. Yes, he can claim full deduction because the amount of
donation is at least P50,000.00.
d. No, he cannot claim full deduction but he may request for
partial deduction.

39. First statement: In the case of gifts made by a non-resident alien, the return shall be
filed with the Philippine Embassy or Consulate in the country where he is domiciled at
the time of the transfer, or directly with the Office of the Commissioner.
Second statement: The term "Office of the Commissioner" shall refer to Revenue
District Office (RDO) having jurisdiction over the BIR National Office which houses the
Office of the Commissioner, or presently, to the Revenue District Office No. 39-South
Quezon City.

a. True, True
b. False, False
c. True, False
d. False, True
40. First statement: In order for donations to be exempt from donor's tax and claimed in
full as deduction, the donee-institution must be duly accredited by the Philippine Council
for NGO Certification (PCNC).
Second statement: 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
b. False, False
c. True, False
d. False, True