True or False I

1. A transfer is either bilateral or unilateral.

2. Unilateral transfers are subject to transfer tax.
3. Bilateral transfers are subject to income tax.
4. Unilateral transfers include sales and barters.
5. Bilateral transfers include inheritance and donations.
6. Donations inter-vivos are subject to estate tax.
7. A donation mortis causa is subject to donor's tax.
8. The transferee in a donation is referred to as a donee.
9. The transferee in a succession is referred to as an heir.
10. The transferor in a donation inter-vivos is a donor.
11. The transferee in a donation mortis causa is a decedent.
12. Complex transfers are subject to both income tax and transfer tax.
13. What constitutes an "adequate consideration" is a question of fact.
14. Both the transfer and exchange element of a complex transfer are subject to transfer tax.
15. Transfer tax supports income taxation.

True or False 2
1. Transfer tax is intended to recoup future reduction in business taxes.
2. Transfer tax can be viewed as a mode of redistribution of wealth to society.
3. The dominant view of transfer tax is the ability to pay theory.
4. Transfer tax is a tax on the privilege to transfer property gratuitously.
5. Transfer taxes are national taxes.
6. Transfer tax is a form of specific tax.
7. Transfer tax is an indirect tax.
8. Transfer tax is a revenue tax.
9. Transfer taxpayers are classified into two groups: residents and non-residents.
10. Non-resident aliens are subject to tax only transfers of Philippine properties.
11. Citizens are subject to tax on transfers of properties regardless of location.
12. Aliens are subject to tax only on transfers of properties situated in the Philippines.
13. Residents are subject to tax on transfers of properties regardless Of location.
14. Non-residents are taxed only on transfers of property located in the Philippines.
15. The reciprocity rule on intangible personal property applies only to non— resident aliens.

True or False 3
1. The reciprocity rule may apply to movable personal property located in the Philippines.
2. The reciprocity rule applies to intangible properties of any alien located in the Philippines.
3. Franchises are subject to transfer tax in the place they are exercised4. The shares and bonds of domestic
corporations are presumed situated in the Philippines for purposes of transfer taxation.
4. Shares and bonds of foreign corporations. are always presumed situated abroad for transfer tax purposes.
5. For purposes 0f transfer tax, the interest in a business partnership organized abroad is presumed situated
abroad.
6. Cash is considered an intangible property-
7. Shares of stocks and bonds are tangible personal properties.
8. Donations inter-vivos are subject to transfer tax at the point of death of the donor.
9. Donations mortis causa are subject to transfer tax at the death of the decedent.
10. Donations inter-vivos are inspired by the generosity of the donor.
11. A donation mortis causa is effected by the death of the decedent.
12. As a rule, all properties of the donor existing at the point of death constitute his donation mortis-causa.
13. All forms of gratuitous transmission of property while the donor is living considered donation inter-vivos.
14. Transfers in contemplation of death are donations made inter-vivos but actually donation mortis causa.
15. The transfers of property which conveys title to the property only upon death of the donor are donations
mortis causa.

Multiple Choice 1
1. Which is subject to transfer tax?
a.Gratuitous transfers c. Complex transfers b. Onerous transfers d. A and C
2. Which is subject to transfer tax?
a. Donation b. Sale c. Loan d. Barter
3. A property is transferred for less than full consideration when it is sold
a. above the fair value of the property. c. below the fair value of the property.
b. at the fair value of the property. d. at any price which is deemed unacceptable to the seller.
4. Gratuity is not characterized by
a. Absence Of consideration c. Presence of adequate consideration
b. Presence of inadequate consideration d. A and C
5. Transfers for full or adequate consideration is subject to
a. Income tax b. Transfer tax c. Both A and B d. Neither A nor B
6. Transfer for inadequate consideration is subject to
a. Income tax b. Transfer tax c. Both A and B d. Neither A nor- B
7. The transfer for adequate consideration is
a. exempt from transfer tax
b. exempt from income tax
c. Subject to tax
d. B and C
8. The gratuitous component of a transfer for inadequate consideration is
a. Subject to income tax
b. Exempt from income tax
c. Exempt from transfer tax
d. A and B

9. Who is the taxpayer in donor's tax?

a. Donor c. Donee
b. Trustee d. Beneficiary

10. Who is the taxpayer in estate taxation?

a. Decedent c. Administrator
b. Estate d. Executor

11. Which is not a rationalization of transfer taxation?

a. tax evasion b. Tax recoupment c. state partnership d. All of these

12. Transfer tax is imposed to partially recover future reduction in income tax which will arise from the split
of income producing property to few or several taxpayers.

What theory does the statement describe?

a. Tax evasion theory c. Benefit received theory
b. Tax recoupment theory d. Wealth redistribution theory

13. The government enforces the transfer of property by donation and succession. By exercising these
privileges, the transferor have to be taxed. What theory does the statement describe?
a. Tax evasion theory c. Benefit received theory
b. Tax recoupment theory d. Ability to pay theory

14. The transfer of wealth should be taxed so that it will benefit the entire society. Which theory does the
statement describe?
a. State partnership theory c. wealth redistribution theory
b. Ability to pay theory d. Tax recoupment theory

15.Wealth accumulation could not be possible without the government indirect participation. The transfer of
wealth should be subject to because it is just fair for the government to take its just share on the weal
The statement describes
a. State partnership theory c. Wealth redistribution theory
b. Ability to pay theory d. Tax minimization theory

16. Transfers can be structured in such a way to avoid payment of income

Thus, the gratuitous component of transfers must be taxed.

The statement describes

a. Tax evasion theory c. Benefit received theory
b. Tax recoupment theory d. Ability to pay theory

17. Which is not a characteristics of transfer tax?

a. Privilege tax b. National tax c. Local tax d. Direct tax

18. Transfer taxes are not

a. Fiscal taxes c. Progressive taxes
b. Ad valorem taxes d. Transaction taxes
 19. Transfer taxes are
a. Regressive c. Specifics taxes
b. Indirect taxes d. Revenue taxes

20. Who is subject to transfer tax?

a. Transferor c. Both transferor and transferee
b. Transferee d. None of these

21. Statement 1: All Philippine transfers are subject to transfer taxes. Statement
2: All foreign transfers 'are subject to transfer taxes.
Which statement is generally correct?
a. Statement 1 c. Both statements
b. Statement 2 d. Neither statement

22. Statement 1: The amount of transfer tax is dependent upon the value of the thing transferred.
Statement 2: Donor's tax is imposed upon the properties of a decedent while estate tax is imposed on a
donor.

Which is incorrect?
a. Statement 1 c. Both statements
b. Statement 2 d. Neither statement

Multiple Choice - Theory: Part 2

1. Transfer tax on donation mortis causa applies to a
a. Natural person c. Both A and B
b. Juridical person d. Neither A nor B

2. Transfer tax on donation inter-vivos applies to a

a. Natural person c. Both A and B
b. Juridical person d. Neither A nor B

3. Which is taxable on all transfers regardless of location?

a. Resident citizen c. Non-resident citizen
b. Resident alien d. All of these
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4. Which is not subject to estate tax?

a. Resident alien c. Domestic corporation citizen
b. Non-resident alien d. Non-resident citizens

5. Which is not subject to transfer tax on transfer of properties located abroad?

a. Resident citizen c. Non-resident alien
b. Resident alien d. Non-resident citizen

6. A non—resident alien is
a. Exempt from transfer taxes.
b. Subject to transfer tax on Philippine properties.
c. Subject to transfer tax on global properties.
d. Subject to transfer tax only on transfers of tangible properties.

7. Which of the following may exempt on transfers on the basis of reciprocity?

a. Resident alien c. Non-resident alien
b. Non-resident citizen d. B and C

8. Which properties does the reciprocity exemption cover?

a. Intangible personal property located abroad
b. Intangible personal property located in the Philippines
c. Tangible and intangible properties located abroad
d. Tangible and intangible properties located in the Philippines

9. Which of the following is an intangible personal property?

a. Franchise b. Stocks c. Bonds d. All of these
 10. Which of these is subject to tax only on transfers of properties situated in the Philippines?
a. A citizen Of Japan residing in the Philippines
b. A citizen of the Philippines residing in Hong Kong
c. A citizen of America residing i n Korea
d. A citizen Of the Philippines residing in the Philippines

11. Which of these is taxable on global transfers of properties?

A. An American residing in the Philippines
B. Filipino residing in Malaysia
C. A Sudanese residing in Bahrain
D. A Chinese residing in the Philippines

a. A and B b. B and D c. C only d. A, B and D

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12. Which is subject to donor's tax?

a. Donation mortis causa c. Sale for an adequate consideration
b. Donation inter-vivos d. Both B and C

13. Which is not a characteristic the generosity of o a f donation the transfer or inter-vivos?
a. inspired by
b. inspired by the thought of death of the transferor
c. zero consideration
d. insufficiency of consideration

14. Which of these is a donation causa?

a. Donation in contemplation of death
b. Donation to take effect upon death
c. Revocable donation pre-terminated by death
d. All Of these

15. Which of the following donations made during the lifetime of the subject to donor's tax?
a. Donation inspired by motives associated with life
b. Donation made during the lifetime of the decedent inspired by the thought of the decedent's death
c. Donation made in of death
d. All Of these

16. Which of the following is not a motive associated with life?

a. To settle family dispute
b. To save on transfer tax
c. To see children financially independent
d. To relieve the donor of the burden of management of the property

17. Donation made on the decedent's last will and testament is

a. a donation mortis causa. c. subject to income tax.
b. a donation inter vivos. d. subject to donor's tax.

18. Which of the following forms of non-taxable transfers will not be subject to transfer tax?
a. Void transfer c. Incomplete transfer
b. Quasi-transfer d. A and B

19. Which of the following forms of non-taxable transfers may be subject transfer tax in the future?
a. Void transfer c. Incomplete transfer
b. Quasi-transfer d. All of these
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20. Which is incorrect regarding the taxation of incomplete transfers which are eventually
completed?
a. They are subject to estate tax.
b. They are subject to donor's tax
c. They are subject to both donor's tax and estate tax.
d. They are subject to either donor's tax or estate tax.
 21. Which is a complete transfer?
a. Conditional transfer
b. Transfer in contemplation of death
c. Irrevocable transfers
d. Transfer with reservation of certain rights until death

22. A conditional donation be completed by

a. Fulfillment of the condition specified by the transferee
b. Waiver of the condition by the transferor
c. Lapse of the right to revoke
d. A and B

23. Conditional transfers and revocable transfers which are still pending completion at the point of the
transferor's death are
a. donation inter-vivos. c. subject to estate tax.
b. subject to donor's tax. d. subject to income tax.

Multiple Choice – Problems: Part 1

1. Mr. Bonifacio purchased a piece of land in 2011 for P 500,000 when it was P450,000. He transferred the
property when it was worth P 1,000,000. Subsequently, Mr. Bonifacio died when the property was worth
P 1,200,000.

Assuming that the donation is a donation inter-vivos, What is the value to be subjected to donor's tax?
a. P 450.000 c. P 1,000,000
b. P 500,000 d. P 1,200,000

2. Assuming that the donation is a donation mortis causa, what is the value to be subjected to estate tax?
a. P 450,000 c. P 1,000,000
b. P 500,000 d. P 1,200,000

3. Mang Juan transferred a property with a fair value of P 1,000,000. Title to the property stipulated to be
transferred immediately. Subsequently, Mang Juan died. The property was worth P800,000 at the date of
his
death.

Which is correct?
a. The property is subject to donor's tax at P 1,000,000.
b. The property is subject to donor's tax at P 800,000.
c. The property is subject to estate tax at P 800,000.
d. The property subject to estate tax of P 1,000,000

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4. Assume instead that legal title to the property was reserved by Mang until the death, which is correct?
a. The property is subject to donor's tax at P1,000,000.
b. The property is subject to donor’s tax at P800,OOO.
c. The property is subject to estate tax at P800,000.
d. The property is subject to estate tax at P1,000,000.

5. A resident citizen died leaving the following property at the Point of his death:
Fair Value Acquisition Cost
House and lot P 4,000,000 P 2,000,000
Car 800,000 1,200,000
Agricultural land 2,100,000 500,000
Compute the amount of the donation mortis causa.
a. P0 c. P 6,900,000
b. P3,700,000 d. P 7,300,000

6. A donor transferred the following properties on a certain day:

Philippines Abroad
Cash P 4,000,000 P0
Land 1,000,000
Car 3,000,000
 Assuming the donor is a resident citizen, what is the amount of the donation inter-vivos?
a. P1,000,000 b. P 1,400,000 c. P 4,000,000 d. P4,400,000

7. Assuming the donor is a resident alien, what is the amount of the donati0n inter-vivos?
a. P 1,000,000 b. P1,400,000 c. P 4,000,000 d. P 4,400,000

8. Assuming the donor is a non-resident citizen, what is the amount of donation inter-vivos?
a. P 1,000,000 b. P1,400,000 c. P 4,000,000 d. P 4,400,000

9. Assuming the donor is a non-resident, what is the amount of donation inter-vivos?

a. P 1,000,000 b. P1,400,000 c. P 4,000,000 d. P 4,400,000

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10. Assuming the donor is a non-resident alien with a reciprocity exemption, what is the amount of
donation inter-vivos?
a. P 1,000,000 b. P1,400,000 c. P 4,000,000 d. P 4,400,000

Multiple Choice – Problems: Part 2

1. Mr. Chucho decedent died leaving the following properties:
Philippines Abroad
Investments in stocks P 500,000 P
House and lot 4,000,000
Residential lot 3,000,000

Assuming Mr. Chucho is a non-resident citizen or a resident alien. what is the amount of donation mortis
causa?
a. P 0 b. P300,000 c. P 3,500,000 d. P 7,500,000

2. Assuming Mr. Chucho is a non-resident alien, what is the amount of the donation mortis causa?
a. P 0 b. P300,000 c. P 3,500,000 d. P 7,500,000

3. Assuming Mr. Chucho is a non-resident alien and the reciprocity rule applies, what is the amount of the
donation mortis causa?
a. P 0 b. P300,000 c. P 3,500,000 d. P 7,500,000

4. A seller of goods made the following sales:

Fair market value P 5,500,000
Selling price 4,500,000
Cost 2,500,000
What is the amount subject to income tax?
a. P 0 b. P1,00,000 c. P 1,500,000 d. P 2,000,000

5. In the immediately preceding problem, what is the amount subject to transfer tax?
a. P 0 b. P1,00,000 c. P 1,500,000 d. P 2,000,000

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6. Avalon sold a car. Data relating to the sale and the car are as follows:
Fair market value P 4,000,000
Selling price 5,000,000
Cost 2,500,000

What is the amount subject to income tax and to transfer tax, respectively
a. P0; P0 c. P1,500,000; P1,000,000
b. P1,500,000; P0 d. P0; P2,500,000
 7. Mr. Peter made a revocable transfer of his stock investments on July 4, in favor of his brother, Merto.
Peter died on December 15, 2020.

The stocks had the following fair values:

July 4, 2020 P 1,200,000
August 20, 2020 1,100,000
December 15, 2020 1,600,000

Assuming Peter waived the right to revoke on August 20, 2020, what is amount subject to transfer tax
and the type of transfer tax to apply?
a. P 1,200,000; donor's tax
b. P 1,100,000; donor’s tax
c. P 1,600,000; donor's tax
d. P 1,600,000; estate tax

8. Assuming Mr. Peter did not revoke the property until the date of his death, what is the amount subject to
transfer tax and the type of transfer tax apply?
a. P 1,200,000; donor's tax c. P 1,600,000; donor's tax
b. P 1,100,000; estate tax d. P 1,600,000; estate tax

9. In October 2020, Mrs. Blender transferred a property to her younger sister Careen, subject to the
condition that Careen must graduate in March 2021

The property was worth P 800,000 in October 2020 and P 900,000 in March 2021. Mrs. Blender died on
July 15, 2021 when the property was worth P1,200,000

Assuming that Careen failed to graduate in March 2021. what is the amount of donation and the transfer
tax to apply?
a. P 800,000; donor's tax
b. P 900,000; donor's tax
c. P 1,200,000; estate tax
d. None; none

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10. During his birthday, Mr. Fu Chen donated the following properties:
Cash donation to his wife P 500,000
Oral donation of house and lot 3,000,000

Compute the taxable amount of donation inter-vivos.

a. P0 c. P3,000,000
b. P 500,000 d. P3,500,000

Multiple-Choice - Problems: Part 3

1. A resident alien conveyed the following properties on the following terms:
Consideration Fair Value
Car P 0 P 500,000
Motorcycle 300,000 300,000
Laptop 20,000 80,000

Compute the total amount subject to transfer tax.

a. P 880,000 c. P 500,000
b. P 560,000 d. P 60,000

2. The following relates to a transfer made by a seller:

Selling price P 1,500,000
Fair value of property at date of sale 4,000,000
Fair value at death of the seller 5,000,000

Assuming that title to the property is transferred on the date of sale, what is the amount of donation and
the type of transfer tax to apply?
a. P 0; none c. P 2,500,000; donor's tax
b. P 1,000,000; estate tax d. P 3,500,000; donor's tax
 3. Assuming that title to the property was agreed upon to take effect on the date of death; is the amount
of donation and the type of transfer tax to apply?
a. P 0; none c. P 2,500,000; donor's tax
b. P 1,000,000; estate tax d. P 3,500,000; donor's tax

4. The following relate to the disposition of property made by a seller:

Selling price P 4,200,000
Fair value of property on date of sale 4,000,000
Fair value at death of the seller 5,000,000

What is the amount subject to donor's tax?

a. P 0 c. P 800,000
b. P 200,000 d. P4,000,000

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5. Assuming that the transfer is revocable until the death of the decedent- seller, what is the amount
subject to estate tax?
a. P 0 c. P 800,000
b. P 200,000 d. P4,000,000

6. A donor transferred properties to save on income taxes. The donation is subject to c. estate tax.
a. income tax. c. estate tax
b. donor's tax. d. both income tax and donor's tax

7. Mr. B made a revocable donation of a property valued at Which is a correct statement regarding the
taxation of the donation?
a. The donation shall be subject to donor's tax.
b. The donation shall be subject to estate tax.
c. The donation is subject to income tax.
d. The donation shall neither be subject to donor's tax nor estate tax.

8. Kumar made an irrevocable donation of real property during his lifetime in favor of his wife.
Which is true?
a. The donation shall be subject to donor's tax.
b. The donation shall be subject to estate tax.
c. The donation is subject to either donor's tax or estate tax.
d. The donation is void and is not subject to transfer tax.

9. Which of these is not considered within the Philippines?

a. Franchise of a foreign franchisor which is exercised in the Philippines
b. Stocks of a domestic corporation with 60% of business in the Philippines
c. Foreign shares which are traded in the Philippine stock market
d. Stocks of a foreign corporation with 75% of business in the Philippines

10. Mr. Ku Loth, transferred a stock portfolio with a fair value of P2,000,000 for P1,990,000.
Ownership shall not transfer until full is made by the transferee within 10 days. On the 10th day, the
buyer paid the price in full when the portfolio was worth P 2,100,000. Subsequently, the transferor
died when the stocks were worth P 3,400,00.

What is the amount subject to transfer tax and the transfer tax that would apply?
a. P 0; None
b. P 50,000; Donor's tax
c. P 100,000; Donor's tax
d. P 1,400,000; Estate tax
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11. Anton donated stock securities to his daughter, Mary. as reward to the latter for services rendered to
Anton. The property was worth P 1,100,000 when Anton wrote the deed of donation. The same
had a value of P1,050,000 when the donation was accepted by Mary.

What is the amount of gratuity and the applicable transfer tax?

 a. P1,050,000; donor’s tax
b. P1,050,000; estate tax
c. P 1,100,000; donor's tax
d. P 1,100,000; estate tax

12. Mr. Erick received in trust a property worth P 1,400,000. Erick was entrusted to be the heir to the
property left by his mother, Marciana. While still living, Erick transferred the same property to his
younger brother, Erwin, in accordance with the will of their mother, Marciana. The property was
worth P1,500,000 at the date of transfer.

The property is
a. subject to donor's tax at P 1,500,000.
b. subject to estate tax at P 1,500,000.
c. subject to donor's tax at P 1,400,000.
d. exempt from transfer tax.
13. Raymund was indebted to Zeus with a P 50,000 interest-bearing loan. Raymund rendered services
worth P51,500 to Zeus. Zeus cancelled Raymund's indebtedness when it was worth P51,500
including interest.

The cancellation of indebtedness is

a. subject to donor's tax.
b. subject to estate tax.
c. exempt from transfer tax.
d. subject to both donor's tax and estate tax.

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