DONORS TAX MULTIPLE CHOISE QUESTIONS

1. An act of liberty whereby one disposes gratuitous of a thing or right in favor

of another who accepts ita. Succession
c. Donation
b. Occupation
d. Tradition
C
2. A tax imposed on the gratuitous transfer of property between two or more
person who are living at the time the transfer is made
a. Estate tax
c. Income tax
b. Gift tax
d. Transfer tax
B
3. The gift tax is imposed on the transfer of property (not on the property itself)
which is why it has been sustained as a (an)
a. Entity theory
c. Cones tax
b. Property Tax
d. Poll tax
A
4. A donation made by a stockholder to a corporation is subject to donors tax
because of the following principles, except
a. Entity theory
c. Benefit received principle
b. Lifeblood theory
d. Tax benefit rule
D
5. What is the tax implication if a corporation condones the debt of a
stockholder because of a good thing done by the latter to the corporation
a. The condonation is based on the liberality of the corporation; therefore, it
is subject to donors tax.
b. The condonation is subject to donors tax on the corporation because it is
based on its liberality. Moreover, it is equivalent to a payment of dividend
to the stockholder which is, therefore, subject to a dividend tax of 10%.
c. It is tantamount to a declaration of dividend. Therefore, it is an income
which is subject to 10% dividend tax on the stockholder. However, it is
not subject to donors tax on the corporation.
d. It is just a simple case of extinguishment of an obligation which is neither
subject to income tax on the stockholder not subject to donors tax on the
corporation.
C
6. Madz went to Bersabren Resort and was given a prize of P50,000 by the
resort for being its 1,000th guest. Is the prize subject to donors tax? Income
Tax?
Donors Tax
Income tax
a.
Yes
Yes
b.
No
Yes
c.
Yes
No
d.
No
No
B The prize given is for business motive and not for donation
purposes. Therefore it is not based on the liberality of the donor.
7. The following are the requisites of a donation for purposes of the donors tax,
except (RPCPA)
a. Capacity of the donor

b. Capacity of the done

c. Delivery of the subject
d. Donative intent
B
8. A donation of one (1) hectare of timberland
a. Can be done orally or in written
b. Must be in writing
c. Maybe in private document
d. Must be in public document
D
9. One of the following is a valid donation
a. Oral donation of a cellular phone worth P4,5000
b. Oral donation of a passenger jeepney worth P150,000
c. A parcel of land worth P5,000 in private document
d. A parcel of land worth P500,000 in a private document
A
10.Which of the following constitutes a taxable gift?
a. Creditors gratuitous discharge of a debtors obligation
b. One day rent- free use of anothers property
c. A gratuitous transfer by an incompetent
d. An agreement to make a future transfer which is not supported by a
consideration
A
11.Antonio donated a share of stocks of Cayetano Corporation to Barandilla on
April 20, 2015 with a right to revoke it. The donor delivered the property April
25, 2015. On June 20, 2015 Antonio relinquished the right to revoke. Ten
days after, the donor died.
For purpose of donors tax, the gross gift should be bases on the value of the
shares on
a. April 20, 2015
c. June 20,2015
b. April 25,2015
d. June 30, 2015
C
12.Warren wrote a letter to Lamont on December 31, 2014 donating his car
worth P350, 000. The letter was received by the latter on January 7, 2015
who accepted the donation. The letter of acceptance was received only by
Warren on January 15, 2015. The donors tax was not paid until May 22,
2016. The donation was consummated on
a. December 31, 20114
c. January 7, 2015
b. January 15, 2015
d. May 22, 2016
B
13.On August 18, 2015 Elizabeth loaned to her sister Martha P200, 000 at an
interest of 12% per annum payable one (1) year thereafter. One month
before the debt become due, Marthas husband died. Consequently, Elizabeth
informed her sister that she is condoning the loan including the interest. How
much is the value of the donation made by Elizabeth to Martha?
a. P200, 000
c. P220,000
b. P224,000
d. None
C
14.Which of the following examples is not taxable (RPCPA)

a. A Filipino citizen donated a parcel of land located in the United States to B,

nonresident alien.
b. On June 12, 2015, A made a gift of P200 ,000 to his daughter on account
of her marriage celebrated may 21, 2014.
c. Mr. Ramos, a multi-millionaire, gives his wife a diamond ring worth P120,
000 as birthday gift.
d. A and B are the only heirs of C. A renounces his share of inheritance in
favor of B.
D
15.Which of the following is subject to donors tax?
a. Donation inter-vivos to Iglesia ni Kristo
b. Donation inter-vivos to International Rice Research Institute.
c. Cash contribution to a political candidate, duly reported on the
Commission on Elections
d. Remission of debt where the debtor did not render service in favor of the
creditor.
D
16.A tax minimization scheme which is done by spreading the gift over
numerous calendar years to avail the lower tax liabilitya. Spread-out method
c. Donation of life
insurance
b. Splitting gift
d. Void donation
B
17.The spouses Helena and Federico wanted to donate a parcel of land to their
son Dondon who is getting married in December 2014. The parcel of land
has a zonal valuation of P420,000.00. What is the most efficient mode of
donating the property?
a. The spouses should first donate in 2014 a portion of the property valued
at P20, 000.00 then spread the P400,000.00 equally for 2015, 2016, 2017
and 2018.
b. Spread the donation over a period of 5 years by the spouses donating
P100, 000 each year from 2014-2018.
c. The spouses should each donate a P110, 000.00 portion of the value of
the property in 2014 then each should donate P100, 000.00 in 2015.
d. The spouses should each donate a P100, 000.00 each in 2015. Then in
2016, Helena should donate the remaining P20, 000.00.
C
18.Statement 1: When the done is exempt from income tax, the donation made
by a taxable individual is also tax exempt.
Statement 2: Proceeds of life insurance policy on the life of decedent where
the designation of the beneficiary is irrevocable is always subject to donors
tax.
Statement 1
Statement 2
a.
True
False
b.
False
True
c.
False
False
d.
True
True
C

19.Statement 1: The agreement between the donor and the done that the latter
shall assume the tax burden is binding on the government.
Statement 2: There is no donors tax in a donation on account on marriage if
the marriage did not actually take place.
a. Only the first statement is wrong.
b. Only the second statement is wrong.
c. Both statements are wrong.
d. Both statements are correct.
C
20.On June 23, 2015, Freddie Boy, a mentally defective 12 year old boy,
executed a deed donating to his brother Aldy a one hectare lot worth
P250,000 located in Magarao, Camarines Sur which was also donated to
Freddie Boy by his father a year ago. The donation isa. Void, because Freddie Boy does not own the property considering that the
donation made to him by his father is void.
b. Void, because Freddie Boy, the donor is minor and mentally defective.
c. Valid, although enforceable.
d. Valid, although voidable because the donor is not capacitated to donate
property.
D
21.Which of the following donations is subject to donors tax?
a. Those made between persons who were guilty of adultery or concubinage
at the time of the donation.
b. Those made to conceived and unborn children.
c. Those made to a public officer by reason of his office.
d. Those made between husband and wife during their marriage.
B
The following donations shall be void:
1. Those made between persons who were guilty of adultery and
concubinage at the time of the donation.
2. Those made between persons found guilty of the same criminal
offense, in consideration thereof;
3. Those made to a public officer of his wife, descendants and
ascendants, by reason of his office.
22.Antiquia donated a 1000 square meter land to Botor with a condition that
within two years from the date of donation, Botor will construct a two-story
building thereon, and that failure of the done to comply with the condition
shall be sufficient ground for the revocation of the donation.
I.
There shall be donors tax on the donation even if it may
be revoked in case of non-fulfillment of the donation.
II.
In case of revocation of the donation, the donors tax
paid to the government may refunded to the donor.
Which of the following statements is correct?
a. Statement 1 only
b. Both statements
A

c. Statement 2 only
d. Neither statements

23.Which of the following statements is false? The gross gift of a non-resident

alien.
a. Will include all intangible personal properties regardless of location.
b. Will include all intangible personal properties situated in the Philippines.
c. With reciprocity will not include all intangible personal properties
regardless of location.
d. Without reciprocity will not include all intangible personal properties
situated outside the Philippines.
A
As a rule, nonresident aliens are not subject to reciprocity. If they are subject
to reciprocity, intangible personal properties (whether within or without) are
not included in the gross gift.
24. Which of the following is not considered as an intangible personal property
within?
a. Franchise which must be exercised in the Philippines.
b. Shares of stocks issued by a domestic corporation.
c. Obligation or bonds issued by a foreign corporation with business situs in
the Philippines.
d. Shares of stocks issued by a foreign corporation 51% of the business of
which is located in the Philippines.
D
In order that shares of stock shall be considered as intangible personal
property within, at least 85% of the business of the issuing foreign
corporation is located in the Philippines.
25.Given the following statements:
I.
A donation by a nonresident alien of shares of stock issued by a
domestic corporation is subject to donors tax if such shares have
acquired business situs in the Philippines.
II.
A donation by a resident alien of shares of stock of a foreign
corporation will only be subject to donors tax if at least 85% of the
business of such corporation is located in the Philippines.
III.
A donation of a nonresident alien of bonds issued by a foreign
corporation is subject to donors tax if 90% of the business of such
foreign corporation is situated in the Philippines.
IV.
A donation by a nonresident citizen of a franchise will be subject to
donors tax in the Philippines even if such intangible is being used
outside the Philippines.
Which of the above statements is/correct?
a. Statements I and III
b. Statements II and IV
C

c. Statements III and IV

d. Statements I and IV

Non-resident citizens and resident aliens are subject to donors tax on

donated properties regardless of location.

COMPUTATION:
26.Which of the following cannot claim P10,000 exemption on gifts given on
account of marriage?
a. Resident citizen
c. Resident alien
b. Nonresident citizen
d. Nonresident alien
D
27.One of the following exemptions cannot be claimed by a non-resident alien
donor.
a. P10,000 dowries or gifts given on account of marriage of a legitimate son.
b. Donation to the National government, its agencies and instrumentalities
or political subdivision thereof.
c. Donation to a non-profit educational institution not more than 30% of the
gift is used for administration purposes.
d. The exemption of P100,000 in the tax table for donors tax.
A
28.Given the following statements:
I.
A donation by a husband and wife jointly of a conjugal property will
require two separate computations of donors tax which will be
contained in two separate donors tax return.
II.
If the property donated is a community property of the spouses, the
spouse who opposes the donation shall not be considered as a donor
and will not be required to pay donors tax return.
III.
If the property donated is a community property of the spouses, each
of them is considered as a donor of his or her share in the co-owned
property and shall be liable for whatever tax that may accrue on such
donation.
IV.
As a rule, a donation inter vivos between spouses during the marriage
is voidable.
Choose the best answer.
a. Statements 1and 4 are true
are true
b. Statements 1 and 2 are true
are true
C

c. Statements 1, 2, and 3
d. Statements 2 and 3

Every donation grant of gratuitous advantage, direct or indirect, between

the spouses during the marriage shall be void, except moderate gifts
which the spouses may be give each other on the occasion of the family
rejoicing.
29. Given the following statements:
I.
If the marriage is not validly solemnized, the donor is not entitled to
the P10,000 exemption because the donation propter nuptias is not
also valid.
II.
Donations propter nuptias by an adopting parent on account of the
wedding of his child by natural adoption will entitle the donor to an
exemption from gross gift of P10,000.

III.

IV.

A wedding ceremony which was solemnized by the mayor is not valid

because he is not authorized to solemnize marriages under the Family
Code, thus the P10,000 exemption from gross gift cannot be claimed
by the donor of a donation propter nuptias.
There is no P10,000 exemption from gross gift on a donation propter
nuptias given by a parent to his daughter who will celebrate her 50 th
wedding anniversary.

Choose the best answer.

a. Statement 1 is true
are false
b. Statement 2 is false
are true
C

c. Statements 2 and 3
d. Statements 1 and 2

For efficient, effective and economical governance the purpose of which is

the genral welfare of the city and its inhabitants pursuant to Section16 of
this Code, the mayor shall:
Solemnize marriages, any provisions of law to the contrary
notwithstanding.
30.Justina donated cash ti his son on account of marriage on October 2014 as
follows:
January 15, 2015
P25,000
March 10,2015
20,000
July 15, 2015
50,000
September 10, 2015 100,000
The donors tax due on September 10, 2015 isa. P750
b. P1,700
B

c. P1,350
d. Exempt

Gross gift

P100,000

Less: Exemptions/ Deductions

Net gift

------------100,000

Add: Prior net gifts

January 15 (25,000-10,000)
March 10

P15,000
20,000

July 15

50,000

Total net gifts

On P100,000

85,000

185,000
Exempt

85,000 x 2%
Gift tax due

P1,700
1,700

31.Which of the following donations result to a net gift of P80,000?

a. Alakdan donated property to Balbakwa with a market value of P140,000.
The property is subject to a mortgage indebtedness of P60,000 which was
paid by the donor at the time of the donation.
b. Altura requested Busina to pay Alturas liability with Cabangis in the
amount of P100,000 and in return, the personap property of Altura valued
at P180,000 will be donated to Busina.
c. The daughter of Ananias was married to her boyfriend. As a gift, Ananias
donated cash worth P100,000 to his daughter.
d. Property worth P80,000 was donated by Bibong to Barangay Maaliwalas
for use as site of the Barangay Hall.
B
32.The following does not result to a gross gift.
a. Donation to the Development Academy of the Philippines.
b. Donation of a parcel of land to brother, the donation is in private
document.
c. Donation of a real property to the City of Manila.
d. Donation of property the encumbrance therein was assumed by the done.
B
33.Exempted from the donors taxation are gifts made (BEQ)
a. For the use of the barangay.
b. In consideration of marriage
c. To a school which is a stock corporation.
d. To a for-propfit government corporation.
A

34.All
a.
b.
c.
d.

of the following except one, are exempt from donors tax. Which is it?
Donation to the Philippine Red Cross.
Donation to the Development Academy of the Philippines.
Donation directly given to the victims of the eruption of Mount Bulusan.
Donation to the City of Davao for public purpose.
C
To be exempt from donors tax, the donation must be given to the following
non-profit institutions: 1) educational, 2) charitable, 3) religious, 4) cultural,
5) social welfare, 6) accredited non-government organization, 7) Philanthropic
organization, and 8) research institution.
Donations directly given to private individuals, no matter how much they may
be inspired by charitable impulses give rise to no exemption.
35.A non-stock, non-profit school always had cash flow problems, resulting in
failure to recruite well trained administrative personnel to effectively manage
the school. IN 2015, Don Leon donated P100 million peos to the school,
provided the money shall be used solely for paying the slaries, wages and

benefits of administrative personnel. The donation represents less than 10 %

of Don Leons taxable income for the year. Is he subject to donors taxes?
(BEQ)
a. No, since the donation is actually, directly, and exclusively used for
educational purposes.
b. Yes, because the donation is to be wholly used for administrative
purposes.
c. Yes, since he did not obtain the requisite NGO certification before he
made the donation.
d. No. because the donation does not exceed 10 % of his taxable income for
2015.
B
36.There is reciprocity when the donor and the donated propertyDonor
Property
a. Nonresident alien
intangibles
b. Nonresident citizen
immovable
c. Nonresident alien
Tangible personal
d. Resident alien
Any kind of property
A

Number 37 to 39 are based on the following data:

37.Annie donated the following properties
Land in Los Angeles, California, USA
Land and building in Jolo, Sulu
Car registered in the States of California, USA
Jewelries in the Philippines
Shares of stock in a corporation based in USA
Accounts receivable, debtor is in the Philippines

P 250,000
175,000
225,000
45,000
60,000
25,000

If Annie is a resident citizen, the gross gift isa. P780,000

b. P295,000
A
Land , California
Land and building in Sulu
Car, California

c. P245,000
d. P220,000
P250,000
175,000
225,000

Jewelries in the Philippines

45,000

Share of stocks, USA

60,000

Accounts receivable, Philippines

Gross gift

25,000
780,000

38.The gross gift of Annie if she is a nonresident alien without reciprocity isa. P780,000
c. P245,000

b. P295,000
C

d. P220,000

Land and building in Sulu

175,000

Jewelries, Philippines

45,000

Accounts receivable, Philippines

25,000

Gross gift

245,000

39.The gross gift if Annie is a nonresident alien with reciprocity isa. P780,000
c. P245,000
b. P295,000
d. P220,000
D
Land and building , Sulu

175,000

Jewelries, Philippines

45,000

Gross gift

220,000

40. Butch made donations to his children in 2015. I which of the following
successive donations will Butch pay donors tax?
a. January 15 To Alma on account of marriage, P40,000.
b. March 15 To Ara on account of graduation, P45,000
c. May 15 To Aiko on account of her 18th birthday, P50,000
d. In all of the above donations.
C
Net gift, May 15

P50,000

Add: Net gift Jan. 15 (40,000-10,000)

30,000

March 15

45,000

Total net gifts

125,000

Tax on P100,000

exempt

25,000x 2%
Gift tax

P500
500

Donation on January 15 and March 15 are not subject to tax because they
do not exceed the P100,000 exemption in the tax table.
41.Which of the following statements is false?
a. Donors tax applies also to juridical persons.
b. For purposes of donors tax, second cousins are strangers to each other.
c. Encumbrance on the property donated, if assumed by the donor is
deductible for donors tax purposes.
d. As a rule, donation between husband and wife during the marriage is void.
C
42.Which of the following is not a factor in the determination of taxable gifts?

a.
b.
c.
d.

Identification of transfers included in gross gift

Application of exempt transfers
Subtraction of allowed deductions,
Multiplying net gift by the applicable rates.
D
Taxable gift refers to the properties subject to gift tax. A net gift
multiplied by the applicable tax rates results to donors (gift) tax and not to
taxable gift.

43.Given the following statements:

I.
The donors tax payable on the present donation includes the previous
donations made during the current year.
II.
It is not proper to add the prior net gifts during the current year
because the taxes paid on the donations will just be credited from the
donors tax computed.
III.
The tax rate on the tax table for donors tax are relatively lower than
the tax rates in the tax table for estate tax.
IV.
The highest tax rate on donors tax is higher than the highest tax rate
on estate tax.
Choose the best answer.
a.
b.
c.
d.

Statements 1 and 2 are false

Statements 1, 2, and 4 are false
Statements 3 ad 4 are correct
Statement 2 is false.
B

44.Mr and Mrs. Abubot donated the following community properties to their
children on May 30, 2015.
Amount
Donee
P125,000
Baron For graduating cum laude at Central Philippine University,
Iloilo City
P200,000
Caricot On account of marriage celebrated April 30, 2014
?
Dakila For placing 3rd in the May 2015 CPA Licensure
Examinations
If the donors tax payable by Mr. Abubot is P10,500, the amount of the
donation given by the spouses to Dakila is?
a. P250,000
c. P500,000
b. P490,000
d. Cannot be determined
C
Algebraic approach:
Let X = Over P200,000 of net gift
4% X = Rate of tax on over P200,000 of net gift
4%X+2,000 = 10,500

4%X =

10,500-2,000

8,500/4%

212,500

Excess over

212,500

First

200,000

Net gift

Let X =

Share of Mr. Abubot on the donation of community

2X

Total donation of spouses

412,500

property
=

(125,000+200,000)1/2 +X

412,500

62,500+100,000+X

412,500

412,500-162,500

250,000

2X

500,000

Alternative Solution:
To Baron (125,000/2)

62,5000

To Caricot (200,000/2)

100,000

To Dakila (squeeze)

250,000

Gross gift

412,500

Less exemptions

-----------

Net gift
Tax on P200,000
212,500x4%

412,5000
2,000
8,500

Gift Tax
45.A stranger in donors taxation
a. Great grandchild
adoption
b. Nephew
C

10,500
c. Child by natural
d. Grand auntie

For donors tax purposes, a stranger is a person who is not a Brother,

sister (whether of the whole or half blood ), spouse, ancestor, lineal
descendant, or a relative by consanguinity in the collateral line within the
4th degree of relationship.

To be considered relative, the child must be legally adopted child of the

donor.
A great grandchild is a lineal descendant. Relatives belonging to direct
line are not strangers to each other regardless of the number of degrees
of relationship between them.
A nephew is collateral relative in the 3rd degree.
A grand auntie is a collateral relative in the 4 th degree.
46.Sayers who is a single, gave an outright gift of P150,000 to a friend, Johnson
who needed the money to pay medical expensesa. The donation is not taxable because the gift is outright.
b. The donors tax payable is P1,000
c. The donors tax is P45,000
d. The donation is deductible from the gross income of Sayers
C
Gross gift

150,000

Rate of Tax (stranger)

30%

Donors tax

45,000

47.Celia donated P110,000.00 to her friend Victoria who was getting married.
Celia gave no other gift during the calendar year. What is the donors tax
implication on Celias donation?
a. The P100,000.00 portion of the donation is exempt since given in
consideration of marriage.
b. A P10,000 portion of the donation is exempt being a donation in
consideration of marriage.
c. Celia shall pay a 30% donors tax on the P110,000 donation.
d. The P100,000 portion of the donation is exempt under the rate schedule
for donors tax.
C
48.Given the following statements:
I.
For the purposes of donors tax, a relative done must always be a
blood