BM1903

Name: Padilla, Aries Christian S. Section: BSMA 401

Transfer Taxation (10 items x 3 points: 2 points for each correct answer and 1 point for the justification)
Choose the letter of the correct answer and justify your answer.

For items 1-2. Mr. Jose purchased a piece of land in 1991 for P500,000 when it was worth P450,000. He
transferred the property when it was worth P1,000,000. Subsequently, Mr. Jose died when the property was
worth P1,200,000.

C 1. If the donation is a donation inter-vivos, what is the value to be subjected to donor’s tax?
a. P450,000 b. P500,000 c. P1,000,000 d. P1,200,000
Explanation:
Since the donation is an inter-vivos which means the property was transferred when the donor is still
alive and transferred the property to a donee. During the transfer, the property is worth 1,200.000.

D 2. If the donation is a donation mortis causa, what is the value to be subjected to estate tax?
a. P450,000 b. P500,000 c. P1,000,000 d. P1,200,000
Explanation:
Because the donation is a donation mortis causa, which means the property is valued at the time of
death, and the property was already worth P 1.200,000 at the time of Mr. Jose's death.

For items 3-4. Mang Kiko transferred a property with a fair value of P1,000,000. Title to the property was
stipulated to be transferred immediately. Subsequently, Mang Kiko died. The property was worth P800,000 at
the date of his death.
A 3. Which of the following 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 P800,000.
c. The property is subject to estate tax at P800,000.
d. The property is subject to estate tax at P1,000,000.
Explanation:
Because Mang Kiko gave the property instantly, it is regarded as a donation inter-vivos, which indicates
that the property was transferred from a living donor to a living donee.

C 4. Assuming instead that legal title to the property was reserved by Mang Kiko until 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 P800,000.
c. The property is subject to estate tax at P800,000.
d. The property is subject to estate tax at P1,000,000.
Explanation:
Because the property is supposed to be transferred at the time of Mang Kiko's death.

C 5. A resident citizen died, leaving the following properties 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

What is the amount of the donation mortis causa?

a. P 0 b. P3,700,000 c. P6,900,000 d. P7,300,000
Explanation:
Because a resident citizen is subject to fair value taxation both within and outside the Philippines.

01 Task Performance 1 *Property of STI

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 BM1903

For items 6-10. A donor transferred the following properties on a certain day:

Philippines Abroad
Cash P 400,000 P 0
Land 1,000,000
Car 3,000,000

D 6. Assuming the donor is a resident citizen, what is the amount of the donation inter-vivos?
a. P1,000,000 b. P1,400,000 c. P4,000,000 d. P4,400,000
Explanation:
The amount of donation inter-vivos is 4,400,000 because resident citizen is subject to tax within or
without the Philippines.

D 7. Assuming the donor is a resident alien, what is the amount of the donation inter-vivos?
a. P1,000,000 b. P1,400,000 c. P4,000,000 d. P4,400,000
Explanation:
Because a resident alien's property in the Philippines and his property overseas that is to be donated are
both subject to tax.

D 8. Assuming the donor is a non-resident citizen, what is the amount of the donation inter-vivos?
a. P1,000,000 b. P1,400,000 c. P4,000,000 d. P4,400,000
Explanation:
The rules in non-resident and resident citizen are the same because they are both subject within and
without the Philippines

B 9. Assuming the donor is a non-resident alien, what is the amount of the donation inter-vivos?
a. P1,000,000 b. P1,400,000 c. P4,000,000 d. P4,400,000
Explanation:
Because a non-resident alien is only taxed on properties that are in the Philippines at the time of the
transfer.

A 10. Assuming the donor is a non-resident alien with a reciprocity exemption, what is the amount of the
donation inter-vivos?
a. P1,000,000 b. P1,400,000 c. P4,000,000 d. P4,400,000
Explanation:
Because of a reciprocity exemption in intangible assets for non-resident aliens.

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