Transfer Taxation Taxation

Donor’s Taxation Introduction to Donation and Donor’s

Tax
Formal Requisites
Essential requisites
1.Real Property - public instrument
 Capacity of the donor
2.Personal Property
 Donative Intent (Intention to
donate)
Donation a. Intangible - public instrument
b. Tangible
 Donative Act or Delivery
- P5,000 and below - orally
 Acceptance by the donee
- Exceeds P5,000 - in writing

Kinds of Donation
 Donation Inter vivos
 Donation Mortis Causa
Transfer Taxation Taxation
Donor’s Taxation Donor’s Tax
Gross Gift P XX
Less: Deductions from Gross Gift XX
Net Gift P XX

Total Gross Gifts on this Donation P XX

Less: Deduction from Gross Gift XX
Total Net Gift on this Donation P XX
Add: Prior Net Gifts during the Year XX
Total Net Gifts subject to tax P XX

Donor’s Tax Due P XX

Less: Donor’s Tax Credits XX
Tax Payable/Refundable P XX
Transfer Taxation Taxation
Donor’s Taxation Gross Gifts
Resident or Real Wherever Situated
Citizen
Tangible Wherever Situated
Composition of Decedent Personal
Gross Gift Intangible Wherever Situated
Non-Resident Real Situated in the Phil.
Alien Tangible Situated in the Phil.
Decedent Personal
Situated in the Phil
Intangible
Valuation of (with reciprocity rule)
Gross Gift

Real Property higher of zonal or assessed value

listed – closing price at date of donation

Preferred Stocks – Par Value
Shares of Stocks not
listed Common Stocks – book value (Adj. Net Asset Value Method)
Newly purchased – purchase price
Other Properties Old items – second hand value
Monetary claims – amount in the contract
 Transfer Taxation Taxation
Donor’s Taxation Gross Gifts
Progressive Tax
Gross
Kinds of Donee Exempt Donations
(OLD LAW) law) Gifts
Relatives  Exempt donees - NIRC and special law
 Brother, Sister, spouses, ancestors and lineal descendants  Election campaign
 Relative by consanguinity w/in the collateral line - 4th
degree 30% proportional  Insufficient consideration – capital asset
Strangers tax (exception)
 Any persons other than  General renunciation of inheritance
relatives  With reserved powers
 Relative by affinity
 Quasi-transfers
 Business organizations
 Void donations
 Foreign donations of NRA donors
Special
Considerations  Property under reciprocity
 first P100,000 - aggregate net gifts to relatives
every year (old law)
Donation by Spouses – Common Properties
 Each is donor - ½ of the donation
 Each is allowed P10,000 exemption - account of
marriage (OLD LAW)
 one spouse signed the deed - only one donor
Donation to Several Donees
same date - one Donor’s
Tax return only
Transfer Taxation Taxation
Donor’s Taxation Donor’s Tax Payable
Resident decedent or citizen decedent
Tax Credit
Resident Alien 𝐍𝐞𝐭 𝐆𝐢𝐟𝐭 𝐢𝐧 𝐅𝐨𝐫𝐞𝐢𝐠𝐧 𝑪𝒐𝒖𝒏𝒕𝒓𝒚
𝐅𝐓𝐂 = × 𝐏𝐡𝐢𝐥 𝐃𝐨𝐧𝐨𝐫 ′ 𝐬 𝐓𝐚𝐱
decedent 𝐖𝐨𝐫𝐥𝐝 𝐍𝐞𝐭 𝐆𝐢𝐟𝐭
One foreign country or Actual Donor’s Tax paid to Foreign Country,
is involved whichever is lower
Limitation
Foreign 𝐓𝐨𝐭𝐚𝐥 𝐅𝐨𝐫𝐞𝐢𝐠𝐧 𝐍𝐞𝐭 𝐆𝐢𝐟𝐭  Actual donor’s tax - foreign
Two or more foreign FTC=
Donor’s 𝐖𝐨𝐫𝐥𝐝 𝐍𝐞𝐭 𝐆𝐢𝐟𝐭𝐬 country
Tax Credit Countries are × 𝐏𝐡𝐢𝐥 𝐃𝐨𝐧𝐨𝐫 ′ 𝐬 𝐓𝐚𝐱  Lower of actual or limit donor’s
(FTC) involved tax credit - per foreign country
Time of within 30 days Resident Donor:
Filing from date of gift  Lower of actual or limit donor’s
 Authorized Agent Bank
tax credit - total foreign country
Filing Date of at the time the  RDO
and Payment return is filed  Collection Agent
Payment  duly authorized Treasurer of the City or Municipality – legal
Place of residence
Filing  Office of the Commissioner - noNonresident
legal residence in the Phils
Donor:
 Philippine Embassy
 Consulate of the country -
 False or fraudulent return is willfully filed
50% domicile
Surcharges  Willful neglect to file the return on time
 Office of the Commissioner
(ad valorem penalty)
25%  Failure to file any return and pay the tax due thereon
 return not filed with the proper internal revenue office
 Failure to pay on time the deficiency tax - notice of assessment

Interest 20%  failure to pay tax per return on time

Transfer Taxation Taxation
Donor’s Taxation Deductions from Gross Gift

Deductions Requisites

on account
 Under the TRAIN Law, Dowry Exemption is now taxable and isofno
marriage,
longerbefore/within
considered one
as ayear
thereafter
Dowries orfrom
 deduction giftsthe
– Pgross
10,000gift. *nonresident alien - not applicable
Note: Dowry to Illegitimate child – no deduction

 Obligations assumed by the donee

 National government and its political

subdivision

 In favor of educational, charitable, religious,  accredited NPO

 Not more than 30% shall be used for administrative
cultural and social welfare institution
purposes

 Diminution of Gift as Specified by the Donor

Transfer Taxation Taxation
Donor’s Taxation Gross Gifts
OLD LAW: NEW LAW:
New Internal Revenue Code of 1997 Tax Reform for Acceleration and Inclusion (TRAIN)
Republic Act No. 8424 Law
Republic Act No. 10963

TRANSFER FOR INSUFFICIENT CONSIDERATION: TRANSFER FOR INSUFFICIENT CONSIDERATION:

All transfers for insufficient consideration
(complex transfers) is subject to donor’s tax except
for transfer involving real properties classified as
capital assets
Sale, exchange or transfer of PROPERTY made in
the ORDINARY COURSE OF BUSINESS (A
TRANSACTION WHISH IS BONA FIDE, AT ARM’S
LENGTH, AND FREE FROM ANY DONATIVE
INTENT), will be considered as MADE FOR AN
ADEQUATE AND FULL CONSIDERATION IN
MONEY’S WORTH.
Transfer Taxation Taxation
Donor’s Taxation Gross Gifts
OLD LAW: NEW LAW (TRAIN)
New Internal Revenue Code of 1997 Tax Reform for Acceleration and Inclusion (TRAIN)
Republic Act No. 8424 Law
Republic Act No. 10963

TAX RATES: TAX RATE:

0%-15% Progressive Tax - Relatives up to 4th 6% Proportional Tax Rate regardless of whether
Degree of Consanguinity of the Collateral Line Relative or Stranger
30% Proportional Tax Rate - Stranger

EXEMPT TAX BASE: EXEMPT TAX BASE:

First P100,000 of aggregated net gifts made to First P250,000 of aggregated taxable gifts made to
Relative Only the Donee (Regardless whether Relative or
Stranger)

DONATION ON ACCOUNT OF MARRIAGE DONATION ON ACCOUNT OF MARRIAGE

(DOWRY): (DOWRY):
First P10,000 exempt per child Taxable in Full; No exemption
Transfer Taxes Taxation
Donor’s Taxation Introduction to Donation and Donor’s
Tax
Multiple Choice Question
1. One of the following statements is false: 1. One of the following statements is false:
A. Contracts of donation between husband and A. Contracts of donation between husband and wife are
wife are void in most cases. void in most cases.
B. The donation by the a public works contractor B. The donation by the a public works contractor to a
to a Mayor, in view of her public office is Mayor, in view of her public office is void in all cases.
void in all cases. C. Donations between persons guilty of adultery or
C. Donations between persons guilty of adultery concubinage are void.
or concubinage are void. D. Donation to a conceived or unborn children is valid.
D. Donation to a conceived or unborn children is
valid.
Transfer Taxation Taxation
Donor’s Taxation Donor’s Tax Payable
Problem 6 – Interest Solution: NIRC (Old Law) TRAIN
(New Law)
On March 6, 2018, a Filipino citizen
donated house and lot with fair Gross Gift 200,000
market value of P200,000 to his 200,000
child on account of marriage on
January 1, 2018. Gift tax return was Less: Exemption/Deduction 10,000
filed and tax paid on July 5, 2018. -
The donor’s tax due, including Net Gifts 190,000
increments, as of July 5, 2018 is: 200,000
Refer to Donors Tax Table (Line 2)
6%
Donor’s Tax Payable 1,800
12,000
Tax due 1,800
12,000
Surcharge of 25% 450
3,000
Interest of 20% (P1,800 x 20% x 3/12) 90
600
Total amount to be paid 2,340
15,600
 Transfer Taxation Taxation
Donor’s Taxation Gross Gifts
PROBLEM 1
Solution:
Ara gave the following properties to various donees on
House and lot in London 3,500,000
December 25, 2018:
Apartment house in Naga City
House and lot in London 3,500,000 8,000,000
Apartment house in Naga City 8,000,000 Car in Iriga City 520,000
Car in Iriga City 520,000 Car in London 900,000
Car in London 900,000 Savings deposit with BPI 50,000
Savings deposit with BPI 50,000 Time deposit in a New York Bank 120,000
Accounts receivable, debtor residing in the Phils 140,000
Time deposit in a New York Bank 120,000
Accounts receivable, debtor residing in Hong Kong 35,000
Accounts receivable, debtor residing in the Phils 140,000
Franchise exercised in New York 225,000
Accounts receivable, debtor residing in Hong Kong 35,000
Franchise exercised in Philippines 120,000
Franchise exercised in New York 225,000
Investment in Good Time Co.,
Franchise exercised in Philippines 120,000 partnership established in Hong Kong 160,000
Investment in Good Time Co., partnership Investment in Lovers Company,
established in Hong Kong 160,000 partnership established in the Philippines 125,000
Investment in Lovers Company, partnership GROSS GIFT
established in the Phils. 125,000 13,895,00
0

How much is the Gross Gift if Ara is a resident or

citizen?
 Transfer Taxation Taxation
Donor’s Taxation Gross Gifts
PROBLEM 2
Solution:
Ara gave the following properties to various
donees on December 25, 2018: Apartment house in Naga City
8,000,000
House and lot in London 3,500,000 Car in Iriga City 520,000
Apartment house in Naga City 8,000,000 Savings deposit with BPI 50,000
Car in Iriga City 520,000 Accounts receivable, debtor residing in the Phils
Car in London 900,000 140,000
Savings deposit with BPI 50,000 Franchise exercised in Philippines 120,000
Investment in Lovers Company,
Time deposit in a New York Bank 120,000
partnership established in the Philippines 125,000
Accounts receivable, debtor residing in the Phils 140,000
GROSS GIFT 8,995,000
Accounts receivable, debtor residing in Hong Kong 35,000
Franchise exercised in New York 225,000
Franchise exercised in Philippines 120,000
Investment in Good Time Co., partnership
established in Hong Kong 160,000
Investment in Lovers Company, partnership
established in the Phils. 125,000

How much is the Gross Gift if Ara is a resident and

citizen of United States (without reciprocity)?
 Transfer Taxation Taxation
Donor’s Taxation Gross Gifts
PROBLEM 3
Solution:
Ara gave the following properties to various
Apartment house in Naga City
donees on December 25, 2018:
8,000,000
House and lot in London 3,500,000 Car in Iriga City 520,000
Apartment house in Naga City 8,000,000 GROSS GIFT 8,520,000
Car in Iriga City 520,000
Car in London 900,000
Savings deposit with BPI 50,000
Time deposit in a New York Bank 120,000
Accounts receivable, debtor residing in the Phils 140,000
Accounts receivable, debtor residing in Hong Kong 35,000
Franchise exercised in New York 225,000
Franchise exercised in Philippines 120,000
Investment in Good Time Co., partnership
established in Hong Kong 160,000
Investment in Lovers Company, partnership
established in the Phils. 125,000

How much is the Gross Gift if Ara is a resident and

citizen of United States (with reciprocity)?
Transfer Taxation Taxation
Donor’s Taxation Donor’s Tax Payable
Problem 1 – Donation of Spouses Solution NIRC (Old Law)
Mr. and Mrs Alavado gave the 1. Mrs. Alavado on May 2, 2018
following donations: Mr. Mrs.
Alavado Alavado
Gross Gift P150,000 P150,000
05-02-18 – Conjugal property valued
at P300,000 donated to Barumbado, Less: Deduction
legitimate son who got married Dowry 10,000 10,000
January 01, 2018. Net Gifts P140,000 P140,000

07-14-18 – Capital property donated Refer to Donor’s Tax Table

to Carlota legitimate daughter who (Line 2) - -
Donor’s Tax P800 P800
got married June 1, 2018 value –
P500,000
Solution TRAIN (New Law)
12-30-18 – Conjugal property
1. Mrs. Alavado on May 2, 2018
donated to Carlota. The dowry has a
fair market value of P800,000. Mr. Mrs.
Alavado Alavado
Gross Gift P150,000 P150,000
Required:
Multiply by: 6% 6%
1) Gift tax due of Mrs. Alavado on
May 2, 2018 Donor’s Tax P9,000 P9,000
2) Gift tax due of Mr. Alavado on
July 14, 2018
3) Gift tax due of Mrs. Alavado on
December 30, 2018
Transfer Taxation Taxation
Donor’s Taxation Donor’s Tax Payable
Problem 1 – Donation of Spouses Solution NIRC (Old Law)
3. Mrs. Alavado on December 30, 2018
Mr. and Mrs Alavado gave the Mr. Mrs.
following donations: Alavado Alavado
Gross Gift P400,000 P400,00
05-02-18 – Conjugal property valued Less: Deduction
at P300,000 donated to Barumbado, Dowry 10,000
Net Gifts P400,000 P390,000
legitimate son who got married
Add: Prior Net Gifts (May 2/July 630,000 140,000
January 01, 2018.
14)
07-14-18 – Capital property donated Total Net Gifts P1,030,000 P530,000
to Carlota legitimate daughter who Refer to Donor’s Tax Table (Line 5) (Line 4)
got married June 1, 2018 value – Donor’s Tax P46,400 P15,800
P500,000 Less: Taxes Paid (May 2/July 14) 21,800 800
Solution TRAIN (New Law)
12-30-18 – Conjugal property Tax Still Payable P24,600 P15,000
3. Mrs. Alavado on May 2, 2018
donated to Carlota. The dowry has a
fair market value of P800,000. Mr. Mrs.
Alavado Alavado
Gross Gift P400,000 P400,000
Required:
Multiply by: 6% 6%
1) Gift tax due of Mrs. Alavado on
May 2, 2018 Donor’s Tax P24,000 P24,000
2) Gift tax due of Mr. Alavado on
July 14, 2018
3) Gift tax due of Mrs. Alavado on
December 30, 2018
 Transfer Taxation Taxation
Donor’s Taxation Donor’s Tax Payable
Problem 2 – Donation to Several Donees
Solution: NIRC (Old Law)
1) January 22, 2018
Anaconda, resident, gave the following donations:
Barbado 140,000
January 22, 2018 Naga City 200,000
Barbado Legitimate son, on account of graduation – Coronado 6,000
P140,000
Dimalupig 7,000
Naga City A parcel of land to be used for public purpose –
Gross Gift 353,000
P200,000
Less: Deductions
Coronado Legitimate child on account of its forthcoming
Public Purpose 200,000
marriage on 02/14/18 – P6,000
Dowry of Coronado 6,000
DimalupigLegitimate daughter, on account of marriage on
Feb. 14, 2017 – P7,000 Dowry of Dimalupig 7,000 213,000
March 25, 2018 Net Gifts 140,000
Refer to Donors Tax Table (Line 2) -----
Barbado On account of marriage on April 10, 2018 –
-------
P150,000
Donor’s Tax Payable 800
Coronado Additional Donation on account of marriage Feb.
14, 2018 – P69,000
DimalupigAdditional Donation on account of marriage Feb. TRAIN (New Law)
14, 2017 – P200,000 Gross Gift (same above)
353,000
DAP For educational and training purposes – P50,000
Less: Deduction (Public Purpose)200,000
Required: Donor’s tax due on
Net Gifts 153,000
1) January 22, 2018
Multiply by:
2) March 25, 2018 6%
 Transfer Taxation Taxation
Donor’s Taxation Donor’s Tax Payable
Problem 2 – Donation to Several Donees
Solution: NIRC (Old Law)
2) March 25, 2018
Anaconda, resident, gave the following donations:
Barbado 150,000
January 22, 2018
Coronado 69,000
Barbado Legitimate son, on account of graduation –
P140,000 Dimalupig
200,000
Naga City A parcel of land to be used for public purpose –
P200,000 Gross Gift 419,000
Coronado Legitimate child on account of its forthcoming Less: Exemption/Deduction
marriage on 02/14/18 – P6,000 Dowry to Barbado 10,000
DimalupigLegitimate daughter, on account of marriage on Dowry to Coronado 4,000 14,000
Feb. 14, 2017 – P7,000 Net Gifts 405,000
March 25, 2018 Add: Prior Net Gifts (01-22-18)
Barbado On account of marriage on April 10, 2018 – 140,000
P150,000 Total Net Gifts
Coronado Additional Donation on account of marriage Feb. 545,000
14, 2018 – P69,000
Refer to Donor’s Tax Table (Line 4) -----
DimalupigAdditional Donation on account of marriage Feb. ------
14, 2017 – P200,000
Donor’s Tax
DAP For educational and training purposes – P50,000 16,700
Required: Donor’s tax due on
Less: Taxes Paid during
1) January 22, 2018
the Year (01-22-18)
2) March 25, 2018 800
 Transfer Taxation Taxation
Donor’s Taxation Donor’s Tax Payable
Problem 2 – Donation to Several Donees
Solution: TRAIN (New Law)
2) March 25, 2018
Anaconda, resident, gave the following donations:
Barbado 150,000
January 22, 2018
Coronado 69,000
Barbado Legitimate son, on account of graduation –
P140,000 Dimalupig
200,000
Naga City A parcel of land to be used for public purpose –
P200,000 Gross Gift 419,000
Coronado Legitimate child on account of its forthcoming Less: Exemption/Deduction
marriage on 02/14/18 – P6,000 0
DimalupigLegitimate daughter, on account of marriage on Net Gifts 419,000
Feb. 14, 2017 – P7,000 Multiply by:
March 25, 2018 6%
Barbado On account of marriage on April 10, 2018 – Donor’s Tax Still Payable
P150,000 25,140
Coronado Additional Donation on account of marriage Feb.
14, 2018 – P69,000
DimalupigAdditional Donation on account of marriage Feb.
14, 2017 – P200,000
DAP For educational and training purposes – P50,000
Required: Donor’s tax due on
1) January 22, 2016
2) March 25, 2016
Transfer Taxation Taxation
Donor’s Taxation Donor’s Tax Payable
Solution: NIRC (Old Law)
Problem 3 – Donations to Stranger 1) July 01, 2018
Mr. Albano Mrs. Albano
Mr. and Mrs Albano gave the Gross Gift 325,000 325,000
following donations: Less: Exemption - -
07-01-18 – Community property was Net Gifts 325,000 325,000
donated to Balaoing, sister of Mr. Donor’s Tax Table (Line 3) x 30%
Albano. The FMV of the property is
Donor’s Tax 7,000 97,500
P650,000.
09-25-18 – Cash of P300,000 to
TRAIN (New Law)
Cuarto, son of Mrs. Albano from
boyfriend. Mr. Albano Mrs. Albano
Gross Gift 325,000 325,000
11-10-18 – Cash of P250,000 was
donated to Balaoing. Less: Exemption - -
Net Gift 325,000 325,000
Multiply by: 6% 6%
Required:
Donor’s Tax 19,500 19,500
1) The donor’s tax due on Mr. and
Mrs. Albano on July 01, 2018.
2) The donor’s tax due on Mr.
Albano on Sept. 25, 2018.
3) The donor’s tax due on Mr. and
Mrs. Albano on November 10,
2018.
Transfer Taxation Taxation
Donor’s Taxation Donor’s Tax Payable
Solution: NIRC (Old Law)
Problem 3 – Donations to Stranger
2) September 25, 2018
Mr. Albano Mrs. Albano
Mr. and Mrs Albano gave the Gross Gift 150,000 150,000
following donations: Less: Exemption - -
07-01-18 – Community property was Net Gifts 150,000 150,000
donated to Balaoing, sister of Mr. Add: Prior Net Gifts (07-01-18) - -
Albano. The FMV of the property is
Total Net Gifts 150,000 150,000
P650,000.
Tax Rate x 30% (line 2)
09-25-18 – Cash of P300,000 to
Donor’s Tax 45,000 1,000
Cuarto, son of Mrs. Albano from
boyfriend. Less: Taxes Paid - -
Donor’s Tax Still Payable 45,000 1,000
11-10-18 – Cash of P250,000 was
donated to Balaoing.
TRAIN (New Law)
Mr. Albano Mrs. Albano
Required:
Gross Gift 150,000 150,000
1) The donor’s tax due on Mr. and
Less: Exemption - -
Mrs. Albano on July 01, 2018.
Net Gift 150,000 150,000
2) The donor’s tax due on Mr.
Albano on Sept. 25, 2018. Multiply by: 6% 6%
Donor’s Tax 9,000 9,000
3) The donor’s tax due on Mr. and
Mrs. Albano on November 10,
2018.
Transfer Taxation Taxation
Donor’s Taxation Donor’s Tax Payable
Solution: NIRC (Old Law)
Problem 3 – Donations to Stranger
3) November 10, 2018
Mr. Albano Mrs. Albano
Mr. and Mrs Albano gave the Gross Gift 125,000 125,000
following donations: Less: Exemption: - -
07-01-18 – Community property was Net Gifts 125,000 125,000
donated to Balaoing, sister of Mr. Add: Prior Net Gifts (07-01-16) 325,000 -
Albano. The FMV of the property is
Total Net Gifts 450,000 125,000
P650,000.
Donor’s Tax Rate (Line 3) x 30%
09-25-18 – Cash of P300,000 to
Donor’s Tax 12,000 37.500
Cuarto, son of Mrs. Albano from
boyfriend. Less: Taxes Paid 7,000 -
Donor’s Tax Still Payable 5,000 37,500
11-10-18 – Cash of P250,000 was
donated to Balaoing.
TRAIN (New Law)
Mr. Albano Mrs. Albano
Required:
Gross Gift 125,000 125,000
1) The donor’s tax due on Mr. and
Less: Exemption - -
Mrs. Albano on July 01, 2018.
Net Gifts 125,000 125,000
2) The donor’s tax due on Mr.
Albano on Sept. 25, 2018. Multiply by: 6% 6%
Donor’s Tax 7,500 7,500
3) The donor’s tax due on Mr. and
Mrs. Albano on November 10,
2018.
Transfer Taxation Taxation
Donor’s Taxation Donor’s Tax Payable
Problem 4 – Tax Credit Solution: NIRC (Old Law)

A, a citizen and resident of the Philippines, made a Gross Gift 210,000

donations on January 10, 2018 as follows: Less: Exemption/Deduction
10,000
• Donation to B, a legitimate son, on account of Net Gifts 200,000
marriage to be celebrated on Feb. 14, 2018, property Refer to Donors Tax Table (Line
in the US (on which a US donor’s tax of P1,200 was 2)
paid with the fair market value of P110,000.00 Over Tax Payable
Donor’s Not Shall be % Over
• Donation to B, cash in the Philippines of P100,000 2,000 Over
0 100,000 exempt 0 0
What is the donor’s tax credit for donor’s tax paid to the
US? 100,000 200,000 0 2% 100,000
𝟏𝟎𝟎,𝟎𝟎𝟎
DTC = 𝟐𝟎𝟎,𝟎𝟎𝟎 × 𝟐, 𝟎𝟎𝟎
= 𝟏, 𝟎𝟎𝟎
or the actual donor’s tax paid to
foreign country P1,200, whichever is
lower.
Transfer Taxation Taxation
Donor’s Taxation Donor’s Tax Payable
Problem 4 – Tax Credit Solution: TRAIN (New Law)

A, a citizen and resident of the Philippines, made a Gross Gift 210,000

donations on January 10, 2018 as follows: Less: Exemption/Deduction
-
• Donation to B, a legitimate son, on account of Net Gifts 210,000
marriage to be celebrated on Feb. 14, 2018, property Multiply by:
in the US (on which a US donor’s tax of P1,200 was 6%
paid with the fair market value of P110,000.00 Donor’s Tax Payable
• Donation to B, cash in the Philippines of P100,000 12,600 𝟏𝟏𝟎,𝟎𝟎𝟎
DTC = × 𝟏𝟐, 𝟔𝟎𝟎
𝟐𝟏𝟎,𝟎𝟎𝟎
What is the donor’s tax credit for donor’s tax paid to the = 𝟔, 𝟔𝟎𝟎
US? or the actual donor’s tax paid to
foreign country P1,200, whichever is
lower.
 Transfer Taxation Donor’s Taxation
Donor’s Taxation Donor’s Tax Payable
Problem 5 Solution: NIRC (Old Law)
Anacleto gave the following donations 1) February 14, 2018
to: Gross Gift 190,000
02-14-18 – Azucena, legitimate Less: Exemption/Deduction -
daughter on account of marriage last Net Gifts 190,000
December 31, 2016 – P190,000. Refer to Donors Tax Table (Line 2)
06-01-18 – Brusco, brother on account Donor’s Tax Payable 1,800
of marriage scheduled Dec. 31, 2017 –
P160,000. TRAIN (New Law)
10-13-18 – Carizosa, legitimate Gross Gift 190,000
daughter on account of marriage on Less: Exemption/Deduction -
November 12, 2017 – P180,000.
Net Gift 190,000
05-03-19 – Dalmacio, father, on account Multiply by: 6%
of marriage, land with a fair market
Donor’s Tax 11,400
value of P1,000,000 but mortgaged for
P100,000 which was assumed by the
donee.
Required:
Donor’s tax payable on:
1) February 14, 2018?
2) June 1, 2018?
3) October 13, 2018?
4) May 3, 2019?
 Transfer Taxation Donor’s Taxation
Donor’s Taxation Donor’s Tax Payable
Problem 5 Solution: NIRC (Old Law)
Anacleto gave the following donations 2) June 1, 2018
to: Gross Gift 160,000
02-14-18 – Azucena, legitimate Less: Exemption/Deduction -
daughter on account of marriage last Net Gifts 160,000
December 31, 2016 – P190,000. Add: Prior Net Gifts (02-14-18) 190,000
06-01-18 – Brusco, brother on account Total Net Gifts 350,000
of marriage scheduled Dec. 31, 2017 – Refer to Donor’s Tax Table (Line 3)
P160,000. Donor’s Tax 8,000
10-13-18 – Carizosa, legitimate Less: Taxes Paid during the Year (02-14-18) 1,800
daughter on account of marriage on Donor’s Tax Still Payable 6,200
November 12, 2017 – P180,000.
05-03-19 – Dalmacio, father, on account TRAIN (New Law)
of marriage, land with a fair market
Gross Gift 160,000
value of P1,000,000 but mortgaged for
P100,000 which was assumed by the Less: Exemption/Deduction -
donee. Net Gift 160,000
Required: Multiply by: 6%
Donor’s Tax 9,600
Donor’s tax payable on:
1) February 14, 2018?
2) June 1, 2018?
3) October 13, 2018?
4) May 3, 2019?
 Transfer Taxation Donor’s Taxation
Donor’s Taxation Donor’s Tax Payable
Problem 5 Solution: NIRC (Old Law)
Anacleto gave the following donations 3) October 13, 2018?
to: Gross Gift 180,000
02-14-18 – Azucena, legitimate Less: Exemption/Deduction 10,000
daughter on account of marriage last Net Gifts 170,000
December 31, 2016 – P190,000. Add: Prior Net Gifts (02-14-18) 190,000
06-01-18 – Brusco, brother on account Prior Net Gifts (06-01-18) 160,000
of marriage scheduled Dec. 31, 2017 – Total Net Gifts 520,000
P160,000. Refer to Donor’s Tax Table (Line 4)
10-13-18 – Carizosa, legitimate Donor’s Tax 15,200
daughter on account of marriage on Less: Taxes Paid during the Year (06-01-18) 8,000
November 12, 2017 – P180,000.
Donor’s Tax Still Payable 7,200
05-03-19 – Dalmacio, father, on account
of marriage, land with a fair market
TRAIN (New Law)
value of P1,000,000 but mortgaged for
P100,000 which was assumed by the Gross Gift 180,000
donee. Less: Exemption/Deduction -
Required: Net Gifts 180,000
Multiply by: 6%
Donor’s tax payable on:
Donor’s Tax 10,800
1) February 14, 2018?
2) June 1, 2018?
3) October 13, 2018?
4) May 3, 2019?
 Transfer Taxation Donor’s Taxation
Donor’s Taxation Donor’s Tax Payable
Problem 5 Solution: NIRC (Old Law)
Anacleto gave the following donations 4) May 3, 2019
to: Gross Gift 1,000,000
02-14-18 – Azucena, legitimate Less: Mortgage assumed 100,000
daughter on account of marriage last Net Gifts 900,000
December 31, 2016 – P190,000. Refer to Donors Tax Table (Line 3)
06-01-18 – Brusco, brother on account Donor’s Tax Payable 38,000
of marriage scheduled Dec. 31, 2017 –
P160,000. TRAIN (New Law)
10-13-18 – Carizosa, legitimate Gross Gift 1,000,000
daughter on account of marriage on Less: Mortgage assumed 100,000
November 12, 2017 – P180,000.
Net Gift 900,000
05-03-19 – Dalmacio, father, on account Multiply by: 6%
of marriage, land with a fair market
Donor’s Tax 54,000
value of P1,000,000 but mortgaged for
P100,000 which was assumed by the
donee.
Required:
Donor’s tax payable on:
1) February 14, 2018?
2) June 1, 2018?
3) October 13, 2018?
4) May 3, 2019?