REVENUE REGULATION 02-2003

SEC. 11. THE LAW THAT GOVERNS THE IMPOSITION OF DONORS TAX. - The donors
tax is not a property tax, but is a tax imposed on the transfer of property by way of
gift inter vivos. (Lladoc vs. Commissioner of Internal Revenue, L- 19201, June 16,
1965; 14 SCRA, 292) The donors tax shall not apply unless and until there is a
completed gift. The transfer of property by gift is perfected from the moment
the donor knows of the acceptance by the donee; it is completed by the
delivery, either actually or constructively, of the donated property to the donee. X
xx

As taken from an Article in the 2005 Ed. Ateneo Law Journal entitled
Perspectives on Estate and Donors Tax Laws: Introduction to and
Evaluation of the Tax Aspects of Estate Planning Atty. Serafin U. Salvador,
Jr. at Pages 449-4501
Based on American cases, the following circumstances were considered and
weighed in determining the dominant motive of the decedent in making inter vivos
transfers of his property:
1. The age of the decedent at the time the transfer was made. 2 It must be noted,
however, that age will always be an extremely vital factor, but advanced age is
never conclusive;3
2. The decedents health, as he knew it, at or before the time of transfer. 4 This has
been held as one of the most important evidentiary factors; 5

1 A digital copy of the same can be accessed at:

http://www.ateneolawjournal.com/Media/uploads/7b207b90727eb86f7decf437c9d03
b7f.pdf
2 See McLure v. Commissioner, 56 F.2d 548 (5th Circuit), cert. denied, 287 U.S. 609,
53 S.Ct. 13 (1932).
3 WILLIAM J. BOWE, ESTATE PLANNING AND TAXATION 232 (3d ed. 1972)
4 See Estate of Johnson v. Commissioner, 10 T.C. 680 (1948).
5 BOWE, supra note 3, at 232.

3. The interval between the transfer and the decedents death; 6

4. The amount of property transferred in proportion to the property retained. 7 Where
a large percentage of the estate owners assets, in relation to his overall wealth, is
given, this points to contemplation of death; 8
5. The nature of the property given by the decedent; 9
6. The nature and disposition of the decedent, whether cheerful or gloomy,
sanguine or morbid, optimistic or pessimistic;
7. The relationship of the donee or donees to the decedent, whether they were the
natural objects of his bounty;
8. The existence of a long established gift making policy on the part of the
decedent;
9. The existence of a desire on the part of the decedent to escape the burden of
managing property;10 and
10. The concurrent making of a will.11

6 See Becker v. St. Louis Union Trust Co., 296 U.S. 48 (1935).
7 See Mclure v. Commissioner, 56 F.2d 548 (5th Circuit), cert. denied, 287 U.S. 609,
53 S.Ct. 13 (1932)
8 BOWE, supra note 3, at 233.
9 Id. at 232 (For example, a life insurance policy is particularly vulnerable to attack,
as insurance is intimately connected to death.).
10 See Vanderlip v. Commissioner, 155 F.2d 152 (2nd Circuit), cert. denied, 329 U.S.
728, 67 S.Ct. 83 (1946).
11 BOWE, supra note 3, at 234.