Beruflich Dokumente
Kultur Dokumente
IX.
Ace Tobacco Corporation bought a parcel of land situated at Pateros and donated
it to the Municipal Government of Pateros for the sole purpose of devoting the said lans
as a relocation site for less fortunate constituents of said municipality. In accordance
therewith, the Municipal Government of Pateros issued to the occupants/beneficiaries
Certificates of Award giving to then the respective areas where their houses are erected.
Through Ordinance No. 2, Series of 1998, the said municipal government ordained that
the lots awarded to the awardees/donees be finally transferred and donated to them.
Determine the tax consequence of the foregoing dispositions with respect to Ace Tobacco
Corporation, the Municipal Government of Pateros, and the occupants/beneficiaries. [5%]
Suggested Answer:
The donation by Ace Tobacco Corporation is exempt from the donors tax
because it qualifies as a gift to or for the use of any political subdivision of the
National Government (Section 101(2), NIRC), The conveyance is likewise exempt
from documentary stamp tax because it is a transfer without consideration.
Since the donation is to be used as a relocation site for the less fortunate
constituents of the municipality, it may be considered as an undertaking for human
settlements, hence the value of the land may be deductible in full from the gross
income of Ace Tobacco Corporation if in accordance to a National Priority Plan
determined by the National Economic Development Authority. (Sec. 34[H](2)(a),
NIRC). If the utilization is not in accordance to a National Priority Plan determined
by the National Economic Development Authority, then Ace Tobacco Corporation
may deduct the value of the land donated only to the extent of five (5%) percent of
its taxable income derived from trade or business as computed without the benefit of
the donation. (Sec. 34[H](2)(a) in relation to Sec. 34[H](1), NIRC).
The Municipality of Pateros is not subject to any donors tax on the value of
land it subsequently donated, it being exempt from taxes as a political subdivision of
the National Government.
The occupants/beneficiaries are subject to real property taxes because they
now own the land.
Alternative Answer on Taxability of Municipality and Awardees:
The awarding by the Municipal Government of lots to specific awardees or
donees is likewise exempt from the donors tax because it is only an implementation
of the purpose for which the property was given by Ace Tobacco Corporation. The
purpose of the first donation is to devote the land as a relocation site for the less
fortunate constituents. If later on the Municipality gives out Certificates of Award
b) Are Jose and Clara subject to donors tax? If so, how much is the
taxable gift of each spouse and what rate shall be applied to the gift? Explain. (4%)
Yes, because the value of the gift exceeds P10,000 (Sec 101[A1] NIRC).
However, they are each entitled to a deduction of P100,000 for the net value of the gift
(Sec. 99[B] NIR). Each spouse shall be liable for a taxable gift worth P890,000 each at
the progressive rate of 2-15%, since the donee is a relative.
*2003*
8%
DONORS
X
X is a friend of Y, the chairman of Political Party Z, who wants to run for
President in the 2004 elections. Knowing that Y needs funds for posters and
streamers, X is thinking of donating to Y P150, 000.00 for his campaign. He asks
you whether his intended donation to Y will be subject to the donors tax. What
would your answer be? Will you answer be the same if he were to donate to
Political Party Z instead of to Y directly?
SUGGESTED ANSWER:
The donation to Y, once he becomes a candidate for an elective post,
is not subject to donors tax provided that he complies with the
requirement of filing returns of contributions with the Commission on
Elections as required under the Omnibus Election Code.
The answer would be the same if X had donated the amount to
Political Party Z instead of to Y directly because the law places in equal
footing any contribution to any candidate, political party or coalition of
parties for campaign purposes. (Section 99(C) of the 1997 Tax Code).
DONORS
VIII.
On December 06, 2001, LVN Corporation donated a piece of vacant lot situated
in Mandaluyong City to an accredited and duly registered non-stock, non-profit
educational institution to be used by the latter in building a sports complex for students.
A.
May the donor claim in full as deduction from its gross income for the taxable
year 2001 the amount of the donated lot equivalent to its fair market value/zonal value as
the time of the donation? Explain your answer. (2%)
B.
In order that donations to non-stock, non-profit educational institution may be
exempt from the donors gift tax, what conditions must be met by the donee? (3%)
SUGGESTED ANSWER:
A.
No. Donating and/or contributions made to qualified donee institutions
consisting of property other than money shall be based on the acquisition cost of the
property. The donor is not entitled to claim as full deduction the fair market
value/zonal value of the lot donated. (Sec. 34(H), NIRC).
B.
In order that donation to non-stock, non-profit educational institution may
be said gifts shall be used by the donee-institution for administration purposes. (Sec.
101 (A)(3), NIRC).
DONORS
XVII
Your bachelor client, a Filipino residing in Quezon City, wants to give his sister a
gift of Php 200,000.00. He seeks your advice, for purposes of reducing if not eliminating
the donors tax on the gift, on whether it is better for him to give all of the Php
200,000.00 on Christmas 2001 or to give Php 100,000.00 on Christmas 2001 and other
Php 100,000.00 on January 1, 2002. Please explain your advice. (5%)
SUGGESTED ANSWER:
I would advice him to split the donation. Giving the Php200,00 as one-time
donation would mean that it will be subject to a higher tax bracket under the
graduate tax structure thereby necessitating the payment of donors tax. On the
other hand, splitting the donation into tow equal amounts of Php100,000 given on
two different years will totally relieve the donor from the donoris tax because the
first Php100,000 donation in the graduate brackets is exempt. (Section 99, NIRC).
While the donoris tax is computed on the cumulative donations, the aggregation of
all donations made by a donor is allowed only over one calendar year.
XVIII
What do you understand by the term flexible tariff clause as used in the Tariff
and Customs Code? (5%)
SUGGESTED ANSWER:
The term flexible tariff clause refers to the authority given to the President
to adjust tariff rate under Section 401 of the Tariff and Customs Code, which is the
enabling law that made effective the delegation of the taxing power to the President
under the Constitution.
[Note: It is suggested that if the examinee cites the entire provision of Sec. 401 of the
Tariff & Customs Code, he should also be given full credit.]