UNIVERSITY OF SANTO TOMAS

IAC 17 - Integrated Review Course in Taxation

TAX – Donor’s Tax

MULTIPLE CHOICE EXERCISES

c. Donation of real (immovable) property, the

1. A tax imposed on the gratuitous transfer of value of which is less than P5,000.
property between two or more persons who are d. Donation of real (immovable) property, the
living at the time the transfer is made value of which exceeds P5,000.
a. estate tax c. income Tax
b. donor’s tax d. transfer tax 8. For the donation to be considered valid,
acceptance of the donation must be made:
2. One of the following is not a distinction between a. During the lifetime of the donor only.
donation inter vivos and donation mortis causa. b. During the lifetime of the donee only.
a. Donation inter vivos takes effect during the c. During the lifetime of the donor and the donee.
lifetime of the grantor while donation mortis d. None of the choices.
causa takes effect after the death of the
grantor. 9. When is the donation perfected?
b. Donation inter vivos is subject to donor's tax a. The moment the donor knows of the
while donation mortis causa is subject to acceptance by the donee
estate tax. b. The moment the thing donated is delivered,
c. Donation inter vivos requires a public either actually or constructively, to the donee
document while donation mortis causa may not c. Upon payment of the donor’s tax
require a public document. d. Upon execution of the deed of donation
d. Donation inter vivos is valued at fair market
value at the time the property is given while 10. The donation of an immovable property shall be
donation mortis causa is valued at the fair made
market value at the time of the death of the a. In writing c. Either A or B
grantor. b. In public instrument d. Orally

3. Donor’s tax is: 11. Using the preceding number, acceptance by the
a. A property tax c. A business tax donee may be made:
b. A personal tax d. An excise tax a. In same deed of donation
b. In a separate document
4. The following are the requisites of a donation for c. Either A or
purposes of the donor’s tax, except one. Bd.NeitherAor
a. Capacity of the donor B
b. Capacity of the donee
c. Delivery of the subject matter or gift 12. A non-resident citizen donor is taxed on his
d. Donative intent donation of properties:
a. Situated in the Philippines only.
5. Which of the following is subject to donor’s tax? b. Wherever situated.
a. Those made between persons who were guilty c. Situated outside the Philippines only.
of adultery or concubinage at the time of the d. Situated in the Philippines only subject to the
donation. rule of reciprocity.
b. Those made to conceived but yet to be born
children. 13. Which of the following is taxable only with respect
c. Those made to a public officer by reason of his to properties donated within the Philippines?
office. a. Resident citizen
d. Those made between husband and wife during b. Non-resident citizen
their marriage. c. Resident alien
d. Non-resident alien
6. Which of the following is not subject to donor’s
tax? 14. Which of the following statements is correct?
a. Donation mortis causa. I. A donation by a nonresident alien of shares of
b. Donation which will take effect upon birth of
stock of a domestic corporation is subject to
the donee.
donor’s tax if such corporation have acquired
c. A creditor who, out of his affection, cancelled
the debt of the debtor. business situs in the Philippines.
d. A parcel of land in U.S.A. donated by a II. A donation by a resident alien of shares of
nonresident Filipino to a foreigner. stock of a foreign corporation will only be
subject to donor’s tax if at least 85% of the
7. Which of the following donations inter vivos may business of such corporation is located in the
not require that it be in writing?
Philippines.
a. Donation of personal (movable) property, the
III. A donation by a nonresident alien of bonds of a
value of which exceeds P5,000.
b. Donation of personal (movable) property, the foreign corporation (90% of the business of
value of which is P5,000. such corporation is located in the Philippines)
is subject to donor’s tax.

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IV. A donation by a nonresident citizen of a b. Capital contribution
c. Donation inter vivos
franchise is subject to donor’s tax even if d. Payment of income
such franchise is exercised outside of the
21. What is the tax implication if a corporation
Philippines. condones the debt of a shareholder because of a
a. III only c. III and IV only good thing done by the latter to the corporation?
b. IV only d. II, III and IV only a. The condonation is based on the liberality of
the corporation, therefore, it is subject to
donor’s tax.
15. If a donor is a non-resident alien and the rule of
b. The condonation is subject to donor’s tax on
reciprocity applies, which of the following
properties will not form part of his gross gift? the corporation because it is based on its
a. Real properties in the Philippines liberality. Moreover, it is equivalent to a
b. Tangible personal properties within the payment of dividend income on the
Philippines shareholder, which is therefore, subject to a
c. Intangible personal properties within the final withholding tax on income of 10%.
Philippines c. It is tantamount to a declaration of dividend.
d. All of the choices
Therefore, it is an income which is subject to
16. X, a multinational corporation not doing business 10% final withholding tax on the shareholder.
in the Philippines, donated 100 shares of stock of However, it is not subject to donor’s tax on the
said corporation to Mr. “Y”, a Filipino citizen. What corporation.
is the tax liability, if any, of “X” corporation? d. It is just a simple case of extinguishment of an
a. The donation is not subject to donor’s tax. obligation which is neither subject to income
b. The donation is subject to 30% donor’s tax tax on the part of the shareholder nor a
based on net gift.
donor’s tax on the corporation.
c. The donation is subject to graduated rates
based on net gift.
d. The donation is subject to 30% donor’s tax 22. Which of the following renunciations shall not be
based on gross gift. subject to donor’s tax?
a. Renunciation by the surviving spouse of
17. A gift that is incomplete because of reserve powers his/her share in the conjugal partnership or
becomes complete when: absolute community after the dissolution of the
I. The donor renounces the power marriage in favor of the heirs of the deceased
spouse or any other person/s
II. His right to exercise the reserve power b. General renunciation by an heir, including the
ceases because of the happening of some surviving spouse, of his/her share in the
event or contingency or the fulfillment hereditary estate left by the decedent
of some condition other than because of c. Renunciation by an heir, including the
surviving spouse, of his/her share in the
the donor’s death. hereditary estate left by the decedent
a. I only c. Either I or II categorically in favor of identified heir/s to the
b. II only d. Neither I nor II exclusion or disadvantage of the other co-heirs
d. None of the choices
18. Which of the following is subject to donor’s tax?
I. Pedro donated a house and lot to Ana. 23. Which of the following events is not subject to
Pedro reserved the right to live in the donor’s tax?
house and lot until he dies. a. A Filipino citizen donated a parcel of land
II. Stanley donated a commercial complex located in the United States to B, non-resident
apartment to Wendy. Stanley reserved the alien.
right to the rentals for five years from the b. A resident alien made a gift of P200,000 to his
date of donation. Stanley died on the third daughter on account marriage.
year. c. A non-resident citizen gives his girlfriend a
III. Angelica donated a mango farm to diamond ring worth P100,000 as a birthday
Sergio. Angelica reserved the right to the gift.
d. A and B are the only heirs of C. A renounces
fruits for five years from the date of his share of inheritance in favor of B.
donation. Angelica died on the seventh
year. 24. Jay sold his car to Jana for P200,000. Jay’s car
a. II only c. I and II only costs P500,000, and had a fair market value of
b. III only d. None of the above P400,000 at the time of sale. What is the tax
consequence of the sale?
a. There is a taxable gift of P300,000
19. When an indebtedness is cancelled without any
b. There is a taxable gift of P200,000.
service rendered by the debtor in favor of the
c. There is a taxable gift of P50,000.
creditor, the forgiveness of debt will result to:
d. The transfer is for insufficient consideration,
a. taxable income
hence, not subject to donor’s tax
b. distribution of dividend
c. taxable donation
25. Cito Yu has a building located in Shorthorn Quezon
d. taxable estate
City currently leased to various tenants. Since he
is old already and wants to retire from active
20. If an individual performs services for a creditor
business, he sold the same to Janjan, his son, for
who in consideration thereof cancels the debt, the
20 million pesos. The value of the building at the
cancellation of indebtedness may amount to a
a. Gift time of sale is 40 Which of the
million pesos. following
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 statements is Tax a. P850,000c.
correct? d. Capital gains FM P1,050,000
a. The sale is for tax and V b. P950,000d.
sufficient Donor’s Tax Car, Makati P200,000 P700,000
consideration Car, Malaysia 300,000
b. The sale is for 28. Alpha Rest House,
32. Which of the
insufficient Corporation is Tagaytay 1,000,000
following is not a
transferring its Rest House,
consideration deduction from
office from Malaysia 1,500,000
subject to gross gift?
Makati to Manila. a. Unpaid
donor’s tax 29. How much is the
It sold to Omega mortgage on the
c. The sale is gross gift?
Corporation its donated
a. P5,200,000
for existing lot and property
P4,100,000
insufficient office building assumed by the
b. P4,200,000
consideratio valued at P80M donee
P3,200,000
for P60M. What b. Unpaid real
n but
tax should be estate tax on
exempt 30. If he is a
imposed and the property
from donor’s non-resident
collected from donated
tax since Alien, his
Alpha assumed by the
gross gift is:
the object is Corporation as a donee
a.
a real result of the c. Diminution on
P3,200,000
property transaction? the donated
P1,100,000
a. Capital gains property
d. The sale b. P1,200,000
tax specifically
is subject P850,000
b. Donor’s Tax provided by the
to capital c. Real property donor
gains tax Tax 31. If he is a non-
d. Unpaid donor’s
and d. Capital gains resident alien, and
tax on the
donor’s tax and there is reciprocity
donated
tax. Donor’s Tax law, his gross gift
property
is:
assumed by the
26. Pedro sold to Juan Next three (3) questions donee
(brother-in-law) are based on the
his residential lot following data: Rody, 33. Which of the
with a market a resident citizen following is not
value of made the following exempt from gift tax
P1,000,000 for donations. under special laws?
P600,000. Pedro a. To Mar, a land a. Donation to
bought the lot worth P450,000 Integrated Bar of
three years ago in Manila. the Philippines
b. To Leni, jewelry b. Donation to
for P400,000. Juan
worth P100,000
is financially Development
in Japan.
capable of buying Academy of the
c. To Miriam, PLDT
the lot. What tax Philippines
shares amounting
should be imposed c. Donation to
to P150,000.
and collected from Philippine
d. To Jojo, a Institute of
Pedro as a result
building in Italy Certified Public
of the transaction?
P1,600,000 Accountants
a. Capital gains
mortgaged for d. Donation to
tax
b. Donor’s Tax P50,000 International
c. Real property assumed by the Rice
Tax donee. Research
e. To Allan, land in
d. Capital gains Institute
Davao worth
tax and
P300,000.
Donor’s Tax 34. Which of the following
f. To Antonio,
is subject to donor’s
P300,000 cash,
27. Pedro donated to tax?
PNB New York
Juan (brother-in- a. Donation to the
g. P200,000 Philippine
law) his residential
receivable to National Red
lot with a market
Joy, 50% Cross
value of
condoned by b. Donation to the
P1,000,000. Pedro
Rody Development
bought the lot
three years ago Rody also transferred Academy of the
for P400,000. the following Philippines
What tax should properties: c. Donation
be imposed and S directly given to
collected from el the victims of
Pedro as a result li the typhoon
of the transaction? n Yolanda
a. Capital gains g d. Donation to the
tax Pr City of Davao for
b. Donor’s Tax ic public purpose
c. Real property e
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35. A tax minimization applicable share. P20,000.
scheme which is done donor’s tax.
by spreading the gift d. The gift should 40. The donor’s tax due February 3 To Petra,
over numerous be made on on the February 25 legitimate
calendar years to account of their donation is: daughter, on
avail of lower tax planned a. P14,000 for Mr. & account of her
liability - marriage to Mrs. marriage on
a. Spread-out avail of dowry b. P3, 600 each for February 1,
method exemption. Mr. & Mrs. 2019, a piece
b. Donation of life c. P4, 000 each for of antique
insurance 37. When the donee or Mr. & Mrs. jewelry from
c. Splitting of gift beneficiary is a d. P0 for each spouse the capital
d. Void donation stranger, the tax property of Mr.
payable by the 41. The donor’s tax due Pinagpala. The
36. Your bachelor client, donor for donations on the June 9 fair market
a Filipino residing in beginning January donation is: value of the
Quezon City, wants to 1, 2018 shall be: a. Mr. – P2,250 for jewelry was
give his girlfriend a a. 30% of the gross each spouse P50,000.
gift of P400,000. He gifts. b. Mr. – P11,250;
seeks your advice, for b. 30% of the net Mrs. – P4,700 To Estela,
purposes of reducing gifts. c. Mr. – P11,250; legitimate
if not eliminating the c. 6% of net gifts in Mrs. – P1,100 daughter, on
donor’s tax on the excess of d. Mr. – P11,250; account of
gift, on whether it is P250,000 Mrs. – P1,875
better for him to give d. Based on the
all of the P400,000 on graduated rates. 42. The donor’s tax
Christmas (December due on the
25, 2018) or to give 38. ABC Corporation December
P200,000 on donated P600,000 donation is: a. Mr.
Christmas and the to the barangay for – P9, 875; Mrs. –
other P200,000 on the purpose of P13, 500
January 1, 2019. cementing a b. Mr. – P67, 500;
barangay road Mrs. – P67, 500
Which of the following where its factory is c. Mr. – P13,500;
will be your advice? located. Mrs. – P13, 500
a. Split the donation Statement 1: The d. Mr. – P9, 000;
to totally relieve donation is exempt Mrs. – P67, 500
the donor from from donor’s tax
the donor’s tax. Statement 2: The 43. The donor’s tax due
b. Split the donation corporation may for their Kumpare
to reduce the claim full deduction on December 25
donor’s tax. for income tax donation is:
c. Splitting the purposes a. P90,000
donation will not a. Statements 1 & 2 b. P18,000
reduce the are false P3,000
b. Statement 1 is
true but d. P18,000 The next three (3)
statement 2 is questions are based on the
false The next four (4) questions following: Mr. and Mrs.
c. Statement 1 is are based on the following Pinagpala made the
false but data: following donations during
statement 2 is On February 25, 2018, Mr. the calendar year 2018
true and Mrs. Salomon donated (common property unless
d. Statements 1 their conjugal land worth otherwise stated):
and 2 are true P500,000 to their three Date
sons. One of them is getting January 2 To Maria,
39. On July 18, 2018, married which prompted legitimate
Mr. Dela Cruz gave the donation. daughter, on
a property with a account of her
fair market value of On June 9, 2018, they also forthcoming
P550,000 to Lester, donated to the child of Mrs. marriage,
a legitimate son, Salomon by first marriage, 10,000 shares
and Jennifer, jewelry worth P75,000 on which are not
Lester’s bride, on account of marriage more traded in the
account of their than a month after the stock
marriage donation. exchange. The
celebrated on July book value at
19, 2017. The Finally on December 25, the time of
2018, they donated to the donation was
donor’s tax
nephew of Mr. Salomon a P50 per share.
payable is: building worth P750,000,
a. P87,100 40% of which was co- To Juana,
owned by their Kumpare family friend
c. P84,100 who agreed to the donation of couple, on
b. P38,000 and executed the necessary account of her
documents donating his birthday,
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 her b. P51,800
graduation, a P45,000 The gift tax
piece of land payable on the
costing 46. How much is the September 25 gifts
P500,000. tax donor’s tax of the husband is:
The fair payable of Mr. a. P8,000c.
market value Pinagpala on gifts P8,600
RPT made on October b. P3,000d.
Declaration 4? P7,000
at the time of a. P126,000c.
donation was P111,000 49. Using the data in
P1,000,000. b. P111,800 the preceding
Its zonal P27,000 number, the gift
value was tax payable on the
P1,200,000. 47. Donor’s tax credit October 9 gift of
The piece of is not allowed to a the husband is:
land had an donor who is a: a. P8,000c.
unpaid a. Resident citizen P7,100
mortgage of b. Non-resident b. P3,000d.
P100,000 citizen P2,500
which was c. Resident alien
assumed by d. Non-resident 50. Mr. Riano made the
the donee. alien following gifts in
2018:
To Lourdes, Use the following data for Phils.
Mrs. the next two (2) questions: USA
Pinagpala's 48. During the current Italy
sister; on year, Mr. and Mrs. Gross gift P750,000
account of Cabarles, non- P500,000
her resident citizens, P250,000
donated the P500,000
forthcoming
Deductions 250,000
marriage, following:
200,000
cash 150,000
Sept. 25: To Leona, a
P100,000. 150,000
legitimate
Tax paid —
child, on
October 4 To Bantay 25,000
account of 12,000
Bata, an
marriage 10,000
accredited
last month,
non-stock
a conjugal The donor’s tax
non- profit
property payable is:
organization,
located in
P250,000.
the
To Belmont
Philippines,
Shipping
FMV,
Company, a
P600,000.
piece of land
valued at To Leo,
P700,000. nephew of
To Anecito, Mr.
legitimate Cabarles,
son, on on account
account of of
his marriage, a
forthcoming property
marriage, located in
cash of USA
P200,000. exclusively
owned by
44. How much is the him with
donor’s tax fair market
payable of Mr. value of
Pinagpala on gifts P150,000
made on January (gift tax in
2? USA,
a. P19,600c. P5,000)
P6,600
b. P7,000 Oct. 9 : To Leonor, a
legitimate
45. How much is the child,
donor’s tax conjugal
payable of Mr. property in
Pinagpala on gifts the
made on February Philippines
3? with fair
a. P58,400c. market
P36,800 value of
P100,000.
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 a. P26,000 c. P33,520
b. P25,600 d. P30,800

51. Statement 1: A donation can be both a part of the

gross gift of the donor and a taxable income to the
donee.
Statement 2: A donation may be exempt from
donor’s tax but not necessarily a deduction from
the donor’s gross income.
a. Only statement 1 is true
b. Only statement 2 is true
c. Both statements are true
d. Both statements are false

52. Statement 1: Only one return shall be filed for

several gifts (donations) made by a donor to
different donees on the same date.
Statement 2: If the donation involves
conjugal/community property, each spouse shall
file separate return corresponding to his/her
respective share in the conjugal/community
property.
a. True, False c. True, True
b. False, True d. False, False

53. Statement 1: If on any one date, there is a

donation by one donor to his relative and another
one to a stranger, there will be two (2) separate
donor's tax return to be filed.
Statement 2: In donor's tax, no extension of time
for filling the donor's tax return is allowed.
a. Statement 1 is correct, while Statement 2 is
wrong
b. Statement 1 is wrong, while Statement 2 is
correct
c. Bothe Statements are correct
d. Both Statements are wrong

54. Statement 1: The Commissioner of Internal

Revenue shall have authority to grant under
meritorious cases, a reasonable extension of not
more than 30 days for filing the donor’s tax return.
Statement 2: In case of gifts made by
nonresidents, the return may be filed with
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.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

55. When a donor with several donations during the

year fails to file the donor’s tax return for each of
the dates that donations were made (select the
wrong statement):
a. Such failure shall be cured by filing a donor’s
tax return at the end of the year reflecting all
donations made within the year and paying
the taxes shown in that one return.
b. Each failure is subject to penalties for non-
filing of return and nonpayment of the tax
on time.
c. He can voluntarily file late the donor’s tax
return for each date that donations were
made and make payments on the tax due
shown on each return, with penalties.
d. None of the above

-done-