DONORS TAX EXERCISES

DONATIVE INTENT (Yes/No)

1. A, Incorporated transfer a plant asset to B Corporation, a subsidiary of A,

Incorporated.
2. A creditor merely desires to benefit a debtor. On January 1, 2012, without any
consideration from the debtor, cancels the debt.
3. On January 1, 2012, a creditor cancels the debt of a debtor in exchange for
services rendered by the latter.

PERFECTION OF DONATION (When, How much)

1. The donor wanted to surprise his girlfriend, GF, in Cebu by sending her a
diamond ring as a birthday gift. The donor purchased the ring worth P5M on
January 1, 2012. He sent the gift through a forwarder, FW Corporation. The
ring was received by his girlfriend on February 14, 2012. Surprised and
overwhelmed with joy, Celine forgot to inform her boyfriend (donor) right
away that she already received the gift. The donor was informed only of the
receipt of the ring on December 25 of the same year. The FMV of the ring on
December 25, 2012 was P5.1M.
2. Mr. M bought a brand new car for his only son, Juan. The car was purchased
at an installment price of P1,050,000 payable in four (4) equal annual
installment of P262,500. The cash price at the date of purchased was
P900,000.
3. Mr. and Mrs. M donated a parcel of land to their only son, Juan with the
following details:
Zonal value as determined by City assessors P 3,000,000
FMV as determined by the CIR 2,500,000
FMV as determined by independent appraisers
3,300,000
Unpaid real property assumed by Juan 250,000
Mortgage assumed by Juan 500,000
TRANSFER FOR INSUFFICIENT CONSIDERATION
1. C Corporation, through its CEO sold a property to E for P1,000,000. The FMV
of the property at the time of the transfer was P10,000,000.

Assume that the property sold was a personal property. What amount of
donors tax, if any, should be paid by C Corporation?

Assume that the property sold was a real property classified as ordinary
asset. What amount of donors tax, if any, should be paid by C Corporation?

Assume that the property sold was a real property classified as capital asset
subject to capital gains tax. What amount of donors tax, if any, should be
paid by C Corporation?

2. B Corporation is engaged in the sale of the most advance cellphones in the

world today. On February 14, 2012, Z went to Bs outlet to buy a cellphone. Z
asked for a discounted price or bargained for a lower price (P30,000) which is
substantially lower than the prevailing price of P60,000. What amount of
donors tax, if any, should be paid by B Corporation?

3. Mr. and Mrs. M sold a parcel of land to their daughter. They immediately
executed a deed of sale with the following details:
Location Ayala Alabang
FMV P 15,000,000
Selling price 25,000
Is the transfer a donation or a sale? If its a donation, how much is the gross
gift?

CONDONATION OF INDEBTEDNESS
1. G borrowed P 10,000,000 from H payable in 3 years without interest. When
the loan became due, G was unable to pay because of business reverses.
Although G was still solvent at the time of maturity of the loan, H decided to
condone the same. Subsequently, the BIR assessed H for unpaid donors tax.
H questioned the assessment and argued that the condonation is not subject
to donors tax because G was not insolvent at the time of the condonation.
 Is the intention of H correct? Did G derive income from the condonation of his
loan or indebtedness?

Assume H condoned Gs indebtedness after rendering service for H, did G

derive income from the condonation?
SPECIAL RULES ON HUSBAND AND WIFE
1. On June 1, 2012, Mr. and Mrs. M donated House and Lot valued at P
6,000,000 to their son. The property is subject to a mortgage of P 2,000,000
to be assumed by the done.

How much is the taxable gift of Mr. M?

How much is the taxable gift of Mrs. M?

SPLITTING OF GIFTS
1. Spouses A and B wishes to donate P 400,000 to their one and only child.
Nonetheless, they were aware that the corresponding donors tax was
significant.