Philippine Transfer and Business Taxes, edition 2013-2014,

by Virgilio G. Litonjua / Lilian M. Litonjua

Answers to Multiple Choice Questions in Chapter 1: GPOT, BIROPF, TR,

CHAPTER I. CPA BOARD QUESTIONS, OK

Q01. D Q11. NONE Q21. C Q31. C Q41. C
Q02 B Q12. D Q22. D Q32. D Q42. A
Q03. C Q13. B Q23. C/G Q33. B Q43. A
Q04. C Q14. C Q24. B Q34. C Q44. D
Q05. D Q15. D Q25. C Q35. C Q45. A
Q06. D Q16. C Q26. C Q36. D Q46.
Q07. B Q17. C Q27. A Q37. D Q47.
Q08. C Q18. D Q28. D Q38. D Q48. B
Q09. A Q19. D Q29. B Q39. C
Q10. A Q20. D Q30. D Q40. D

No Multiple Choice Questions in Donor’s Tax Chapter 2.

Answers/Solutions to Problems in Donor’s Tax Chapter 3: TNG, GTD,

Problem 1. Various Donors donees are relatives donees are strangers

Donors TNG DTD NGADT DTD NGADT
01. BIM 375,000 9,000 384,000 112,500 487,500
02. BAM 76,900 0 76,900 23,070 99.970
DTD TNG NGADT TNG NGADT
03 BOM 287,000 3,830,000 4,117,000 956,667 1,243,667
04 GIGI 192,000 2,850,000 3,042,000 640,000 832,000
05 GAGA 45,000 1,012,500 1,057,500 150,000 195,000

C1. 2,000 + (175,000 X 4%) = 7,000 = 9,000 DTD R, C2. EXEMPT SINCE TNG IS NOT OVER P100,000,
C3. (204,500 = 3,000,000) + (83,000 / 10% = 830,000) = 3,830,000 TNG
C4. (44,000 = 1,000,000) + (148,000 / 8% = 1,850,000) = 2,850,000 TNG
C5. (44,000 = 1,000,000) + (1,000 / 8% = 12,500) = 1,012,500 TNG
C6. 375,000 X 30% = 112,500 DTD, C7. 76,900 X 30% = 23,070 DTD,
C8. 287,000 / 30% = 956,667 TNG, C9. 192,000 / 30% = 640,000TNG,
C10. 45,000 / 30% = 150,000 TNG

Problem 2. Mr. Oyo Boy

Relative Stranger Total
Taxable net Gift 382,600 53,000 435,600
Gift Tax due 9,304 15,900 25,204
(0-15%) 30%

C1. 295,000 + 60,000 + 27,600 = 382,600 GG R C2. 38,000 + 15,000 = 53,000 GG S

C3. 382,600 + 53,000 = 435, 600 C4. 53,000 x 30% = 15,900 DTD S
C5. 182,600 x 0.04 = 7,304 + 2,000 = 9,304 DTD R

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Problem 3. Ms. Angel L
(RCD) (NRAD)
Donations Phil. 653,000 653,000
Donations Abroad 280,000 0
Gross Gift 933,000 653,000
Less: Allowed Deduction Phil. 96,500 96,500
Allowed Deduction Abroad 75,400 0
Total Allowed deduction 171,900 96,500
Taxable Net Gift 761,100 556.500
Gift Tax due 228,330 17,3 80
(30%) (0 - 15%)

C1. 761,100 X 30% = 228.330 DTD S, C2. 14,000 + (56,000 X 6%) 3,390 = 1,390 DTD R

Problem 4. Miss Rica P.

Relative Stranger Total
Gross Gift 633,750 341,250 975,000
Allowed Deduction 79,500 185,500 265,000
Taxable Net Gift 554,250 155,750 710,000
Gift Tax due 17,255 46,725 63,590
(0-15%) (30%)

C1. 975,000 X 65% = 633,750 GG R C2. 975,000 X 35% = 341,250 GG S,

C3. 265,000 X 70% = 185,500 AD S C4. 265,000 X 30% = 79,500 AD R
C5. 14,000 + (54,250 X 6%) = 3,255 = 17,255 DTD R C6. 155,750 X 30% = 46,725 DTD S

Problem 5. Mr. Marvin A.

FEB. 2013 JUNE 2014
Gross Gift 535,500 130,000
Allowed Deduction 140,000 15,000
Taxable Net Gift 395,500 115,000
Gift Tax due 9,820 300
Gift Tax Paid 0 0
Gift Tax Still Due / Payable 9,820 300

C1. 500,000 + 35,500 = 535,000 GG, C2. 2,000 + (195,500 X 4%) 7,820 = 9,820 DTD
C3. 95,000 + 35,000 = 130,000 GG C4. 15,000 X 2% = 300 DTD

Nov. 2014
Gross Gift – C 111,500
Allowed Deduction- C 24,000
Net Gift - C 87,500
Add: prior Net Gift 115,000
Taxable Net Gift 202,500
Gift Tax Due 2,100
Gift Tax Paid 300
Gift Tax Still Due / Payable 1,800

C1. 65,000 + 1,500 + 45,000 = 111,500 GG C2. 14,000 + 10,000 = 24,000 AD

C3. (2,500 X 4%) = 100 + 2,000 = 2,100 DTD

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Problem 6. Miss Jennelyn M.
RAD NRAD
Gross Gift 725,000 475,000
Allowed deduction 192,200 120,700
Taxable Net Gift 532,800 354,300
Gift Tax due 159,840 8,172
(30%) (0-15%)

C1. 385,000 + 160,000 + 90,000 + 90,000 = 725,000 GGW

C2. (86,500 – 15,000) + 71,500 + 120,700 = 192,200 ADW C3. 385,000 + 90,000 = 475,000 GGP
C4. 532,800 X 30% = 159,840 DTD S C5. (154,300 X 4%) 6,172 + 2,000 = 8,172 DTD R

Problem 7. Mr. & Mrs. Richard G.

Husband Wife Friend
Gross Gift 462,500 315,000 62,500
Allowed Deduction 116,000 110,000 15,000
Taxable Net Gift 346,500 205,000 47,500
Gift Tax Due 7,860 2,200 14,250
(0-15%) (0-15%) 30%

C1. 80,000 + (250,000 x 75%+ (390,000 x 50%) = 462,500

C2. 120,000 + (390,000 x 50%) = 315,000
C3. 250,000 x 25% = 62,500 C6. 60,000 x 25% = 15,000
C4. 26,000 + (90,000 x 50%) + (60,000 x 75%) = 116,000 C7. (5,000 X .04) 200 + 2,000 = 2,200 DTD S
C5. 65,000 + 45,000 = 110,000 C8. (146,500 X .04 ) 5,860 + 2,000 = 7,860 DTD R
C9. 47,500 X 30% = 14,250 TD S

Problem 8. Mr. Francis M.

Aug. 28, 2013
Gross Gift 225.700
Allowed Deduction 13,400
Taxable Net Gift 212,300
Gift Tax Due (0 – 15%) 2,492

Nov. 24, 2013

Gross Gift 92,100
Allowed Deduction 18,200
Net Gift 73,900
Add: Prior Net Gift 212,300
Taxable Net Gift 286,200
Gift Tax Due (0 – 15%) 5,448
Prior Gift Tax Paid 2,492
Gift Tax Still Due / Payable 2,956
(0-15%)

C1. 190,000 + 35,700 = 225,700 GG C2. 5,000 + 8,400 = 13,400 AD

C3. 12,300 x .04= 492 + 2,000 = 2, 492 DTD C4. 79,600 + 12,500 = 92,100 GG C
C5. 86,200 x .04= 3, 448 + 2,000 = 5, 448 DTD

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Problem 9. Mr. Dennis T.

1 2 3.NRCD
RCD NRAD Relative Stranger Total
Gross Gift 1,430,000 980,000 1,001,000 429,000 1,430,000
Less; Allowed deduction 305,000 175,000 152,500 152,500 305,000
Taxable Net Gift 1,125,000 805,000 848,500 276,500 1,125,000
Gift Tax Due 337,500 32,300 34,910 82,950 117,860
30% (0-15%) (0-15%) (30%)

C1. 980,000 + 450,000 = 1,430,000 C2. 175,000 + 130,000 = 305,000

C3. 1,125,000 x .30 = 337,500 C4. 305,000 x .06 =18,300+14,000 = 32,300
C5. 1,430,000 x .70 = 1,001,000 C6. 1,430, 000 x .30 = 429,000
C7. 305,000 x .50 = 152,500
C8 348,500 x 6% = 20,910 + 14,000 = 34,910

Answers/ Solutions to Problems in Donor’s Tax Chapter 4: Tax. Credit.

Problem 01. Resident donor, Foreigner

RAD NRAD
Gross Gift 540,000 350,000
Allowed Deduction 140,000 80,000
Taxable Net Gift 400,000 270,000
Gift Tax due 10,000 4,800
Tax Credit 4,650 1,400
Gift Tax still Due / payable 5,350 3,400

C1. 350,000 + 190,000 = 540,000 C2. 80,000 + 60,000 = 140,000

C3. 2,000 + (200,000 x .04) = 10,000 C4. 2,000 + (70,000 x .04) = 4,800
C5 70,000 x .02 = 1,400
C6 130,000 / 400,000 x 10,000 = 3,250 Formula Actual 24,500 Lower 3,250
C7 3,250 + 1,400 = 4,650

Problem 02. Boyet De Leon

NRCD NRAD
Taxable Net 1,000,000 600,000
Gift Tax due 300,000 180,000
Tax Credit 106,000 0
Gift Tax Still Due / Payable 194,000 180,000

C1. 600,000 + 250,000 + 150,000 = 1,000,000 C2. 1,000,000 x 30% = 300,000

C3. 600,000 x 30% = 180,000
C4. Limit A
Formula Actual Lower
Japan – 250,000 / 1,000,000 x 300,000 = 75,000 68,500 68,500
USA – 150,000 / 1,000,000 x 300,000 = 45,000 37,500 37,500
106,000
C5. Limit B
Formula Actual Lower
Abroad – 400,000 / 1,000,000 x 300,000 120,000 106,000 106,000

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Problem.03. Aga Mulach -NRCD
Feb. 2013 July 2013
Gross Gift ? 475,000
Allowed Deduction ? 162,500
Net Gift 250,000 312,500
Add: Prior Net Gift 0 250,000
Taxable Net Gift 250,000- 562,500
Gift Tax Due 4,000 17,750.00
Prior Gift Tax Due 0 13,861.11
Gift Tax Still Due / Payable 4,000 3,888.89

C1 50,000 x .04 = 2,000 + 2,000 = 4,000 C2. 175,000 – 12,500 = 162,500

C3 62,500 x .06 = 3,750 + 14,00 = 17,750
C4. 9,861.11 + 4,000 = 13,861.11

Formula Actual Lower

Abroad – 312,500 / 562,500 x 17,750 9,861.11 12,500 9,861.11

Problem 04. Mr. Bong Revilla

Amended Donor’s Tax Return filed in May 2013
RAD NRAD
Gross Gift 370,000 180,000
Allowed Deduction 120,000 50,000
Taxable Net Gift 250,000 130,000
Gift Tax due 4,000 600
Tax Credit 2,120 0
Gift Tax still Due / payable 1880 600

C1. 120,000 + 180,000 + 70,000 = 370,000 C2. 30,000 + 50,000 + 40,000 = 120,000
C3. Limit A
Formula Actual Lower
GB- 90,000/ 250,000 x 4,000 = 1,440 8,600 1,440
Israel- 30,000/250,000 x 4,000 = 480 3,500 480
Total 1,920 12,100 1920
C4. Limit B
Formula Actual Lower
Abroad- 120,000/ 250,000 x 4,000 1,920 12,100 1,920

C5. 2000 + (50,000 x .04) = 4,000 C6. 30,000 x 0.02 = 600 C7. 1,920 + 200 = 2,120

Original Donor’s Tax Return filed in March 2013

RAD NRAD
Gross Gift 275,000 150,000
Allowed Deduction 165,000 90,000
Taxable Net Gift 110,000 60,000
Gift Tax Due / Paid 200 0

C1. 85,000 + 250,000 + 40,000 = 275,000 C2, 53,000 + 90,000 + 25,000 = 165,000

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Problem 5. Kris Aquino
July , 2013 Oct. 2013
Gross Gift 350,000 540,000
Allowed Deduction 120,000 90,000
Net Gift 230,000 450,000
Add: Prior Net Gift 0 230,000
Taxable Net Gift 230,000 680,000
Gift Tax Due 69,000 204,000
Prior Gift Tax Paid 0 99,000
Gift Tax Still Due / Payable 69,000 105,000

C1. 230,000 x 30% = 69,000 C2. 69,000 + 30,000 = 99,000

C3. 400,000 + 140,000 = 540,000 C4. 50,000 + 40,000 = 90,000
C5 Tax Credit
Formula Actual Lower
Abroad – 100,000 / 680,000 x 204,000 30,000 35,000 30,000

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Answers/ Solutions to Problems on Donor’s Tax Chapter 5: Gross Gift

Problem 01. Mr. Pepsi Cola

Non Resident Citizen donor Non- Resident Alien donor
R S Total R S Total
a. 0 200,000 200,000 0 200,000 200,000
b. 0 180,000 180,000 0 0 0
c. 260,000 0 260,000 0 0 0
d. 50,000 0 50,000 50,000 0 50,000
e. Excluded Excluded 0 Excluded Excluded 0
f. 0 35,000 35,000 0 35,000 35,000
g. 0 15,000 15,000 0 15,000 15,000
h. 12,600 0 12,600 12,600 0 12,600
i. 14,00 0 14,000 14,000 0 14,000
j. 0 36,700 36,700 0 36,700 36,700
k. Excluded Excluded 0 0 0 0
l. 25,000 0 25,000 0 0 0
Gross Gift 361,600 466,700 828,300 76,600 286,700 363,300

Problem 02. Miss Pop Cola

Relative Strangers Total
a. 0 160,000 160,000
b. 37,500 37,500 75,000
c. 0 15,000 15,000
d. 130,000 0 130,000
e. 15,000 0 15,000
f. 0 45,000 45,000
g. Excluded Excluded 0
h. 0 15,000 15,000
i. 0 35,000 35,000
j. Excluded Excluded 0
Gross Gift 182,500 307,500 490,000

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Problem. 03. Mr. Zesto
Relative Strangers Total
a. 950,000 0 950,000
b. 350,000 0 350,000
c. 75,000 0 75,000
d. Excluded Excluded 0
e. 25,700 0 25,700
f. 0 15,900 15,900
g. 42,500 0 42,500
h. 50,000 0 50,000
i. 0 14,800 14,800
Gross Gift 1,493,200 30,700 1,523,900

Problem 04. Mr. Sarsi

1 2 1 2
a. TG 85,000 h. TG 3,000,000
b. TG 300,000 I. TG 120,000
c. TG 75,000 j. Exclusion 0
d. TG 250,000 k. TG 460,000
e. TG 400,000 l. Exclusion 0
f. TG 21,700 m. Exempt 35,000
g. TG 75,600 (3) Gross Gift 4,822,300

C1 350 shares x P62 = 21,700 C2 540 shares x P140 = 75,600

Problem 05. Mr. Coca Cola

Relative Strangers Total
a. 54,000 0 54,000
b. 41,000 0 41,000
c. 0 30,000 30,000
d. 0 15,000 15,000
e. Excluded Excluded Excluded
f. 0 21,000 21,000
g. Excluded Excluded Excluded
h. 18,000 0 18,000
i. 0 32,000 32,000
j. 0 250,000 250,000
k. Excluded Excluded Excluded
l. 0 75,000 75,000
m. 70,000 0 70,000
Gross Gift 183,000 423,000 606,000

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 Answers/ Solutions to Problems on Donor’s Tax Chapter 6: Allowed Deduction

Problem 01. Mr. Seven-up, Exemption on Account of Marriage

February, 2013 November 2013

a. 7,000 3,000
b. 9,000 1,000
c. 0 0
d. 10,000 0
e. 0 0
f. 0 0
g. 0 0

Problem 02. Mr. Rootbeer, exemption on account of marriage in 2013

Relative Stranger Total

a. 60,000 0 60,000
b. 0 27,000 27,000
c. 75,000 0 75,000
d. 4,500 0 4,500
e. 0 85,000 85,000
f. 0 0 0
Gross Gift 139,500 112,000 251,500
a. 10,000 0 10,000
c. 20,000 0 20,000
e. 0 85,000 85,000
g. 0 12,000 12,000
Allowed Ded. 30,000 97,000 127,000
Taxable Net Gift 109,500 15,000 124,500

Problem 03. Ms. Del Monte in 2013

Relative Stranger Total

a. Cash to sister, a graduation gift 15,000 15,000
b. Shoes, clothes to a brother, a birthday gift 20,600 20,600
c. Jewelry to a legitimate daughter, a dowry 165,000 165,000
d. Lot in QC a wedding gift to her recognized natural son & wife 225,000 225,000 450,000
e. An art painting, donation inter-vivos to her uncle 150,000 150,000
Gross Gift 575,600 225,000 800,600
Less: Deduction on account of marriage (e) 20,000 20,000
Taxable Net Gift 555,600 225,000 780,600
Donor’s Tax Due 17,336 67,500 84,836

C1. 17,336 + 67,500 = 84,836

Problem 04. Mr. & Mrs. Mountain Dew

Exemptions on account of marriage
October 2013 December 2013
Husband Wife Husband Wife
a. 10,000 10,000 0 0
b. 3,500 3,500 5,250 5,250
c. 0 10,000 0 0

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 d. 3,000 3,000 6,000 6,000
e. 0 0 0 0
f. 0 0 0 0

Problem. 05. Mrs. Mirinda in 2013

Relative Stranger Total
Gross Gift 148,000 642,200 790,200
Allowed Deduction 25,000 623,600 648,600
Taxable Net Gift 123,000 18,600 141,600
Gift Tax Due

C1 48,000 + 15,000 + 85,000 = 148,000

C2 16,800 + 30,000 + 6,800 + 542, 700 + 45,900 = 642,200
C3 10,000 + 15,000 = 25,000 C4 5,000 + 30,000 + 542,700 + 45,900 = 623, 6

Problem 06. Miss Sprite, in 2013

Resident Citizen Donor
Relative Stranger Total
a. 25,000 0 25,000
b. 60,000 0 60,000
d. 190,000 0 190,000
f. 0 17,000 17,000
g. 5,400 0 5,400
h. 9,800 9,800 19,600
i. 0 80,000 80,000
j. 15,000 0 15,000
k. 0 25,000 25,000
n. 0 6,000 6,000
o. 29,000 0 29,000
p. 8,000 0 8,000
q. 0 37,00 37,000
Gross Gift -World 342,200 174,800 517,000
b. 60,000 0 60,000
f. 0 17,000 17,000
h. 9,800 0 9,800
i. 0 80,000 80,000
j. 10,000 0 10,000
p. 200 0 200
q. 0 37,000 37,000
Allowed Ded -World 80,000 134,000 214,000
TNG - World 262,200 40,800 303,000

Excluded are Letters c, e. l,

Non-Resident Alien Donor
Relative Stranger Total
a. 25,000 0 25,000
b. 60,000 0 60,000
f. 0 17,000 17,000
g. 5,400 0 5,400
h. 9,800 9,800 19,600
i. 0 80,000 80,000
n. 0 6,000 6,000

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 o. 29,000 0 29,000
p. 8,000 0 8,000
q. 0 37,000 37,000
Gross Gift – Phil. 137,200 149,800 287,000
f. 0 17,000 17,000
h 0 0 0
i. 0 80,000 80,000
p 0 0 0
q. 0 37,000 37,000
Allowed Ded. Phil 0 134,000 134,000
Taxable Net Gift-Phil 137,200 15,800 153,000

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Problem 7. Mr. Tommy Gilna
Sept., 2013 Dec., 2013
Gross Gifts 431,500 85,000
Allowed Deduction 60,000 50,000
Taxable Net Gift/ Net Gift 371,500 35,000
Prior Net Gift 0 371,500
Taxable Net Gift 371,500 406,500
Gift Tax due 8,860 10,260
Prior Gift Tax Paid 0 8,860
Gift Tax Still Due / Payable 8,860 1,400

C1. 28,000 + 8,500 + 15,000 + 380,000 = 431,500 C2. 10,00 + 50,000 = 60,000
C3. (171,500 x 0.04) + 2,000 = 8,860 C5. (206,500 x 0.04) + 2,000 = 10,260
C4. 50,000 + 16,000 + 5,000 + 14,000 = 85,000

CPA MCQ In DONOR’S TAX

SET A, THEORIES
1. C 11. B 21. A
2. B 12. B 22. A
3. B 13. B 23. D
4. D 14. B 24. A
5. A 15. B 25. C
6. A 16. A 26. D
7. A 17. D 27. D
8. B 18. A 28. A
9. B 19. B 29. A
10. A 20 C 30. C

SET B, PROBLEMS
1. A 11. B
2. C 12. C
3. C 13. C
4. B 14. A
5. D 6,000 15. A
6. D, 1,200 16. B
7. A 17. A
8. B 18. C P0
9. A 19. D P0

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10. A 20 B

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