Problem No.2
Problem No.2
Problem No.2
I. Mr.P, a Filipino citizen, died in Cebu City on March 2009, leaving the following
properties:
beneficiary 250,000
==========
TOTAL P 905,000
Deductions claimed
==========
TOTAL P 300,000
Compute the net estate and the estate tax due and payable.
ANSWER:
Item no. 5 and item no 7 is not included as they are exemptions under special laws.
Gross Estate:
1. Household furnitures and appliances P 150,000
beneficiary 250,000
==========
TOTAL P 705,000
Deductions
==========
TOTAL P 235,250
Funeral Expenses:
======
200,000 0
269,750 X 5% 13,487.50
=========
PROBLEM NO.1
I. Mr. P, a Filipino citizen, a widower with 2 children, died while having a vacation on
May 2008 in New York City, leaving the following properties:
Beneficiary 300,000
=======
TOTAL 8,300,000
Deductions claimed
=======
TOTAL P 3,300,000
Compute the Net Estate and the estate tax due and payable.
ANSWER :
TAKE NOTE ITEM NO. 9 IS NOT INCLUDED AS IT IS AN EXCLUSION AND ITEM NO. 10,
IS AN EXEMPTION THEREFORE NOT INCLUDIBLE IN THE GROSS ESTATE OF THE
DECEDENT.
=======
TOTAL 7,500,000
Deductions claimed
=======
TOTAL P 3,050,000
=============
2,000,000 135,000
=========
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Index for Donor's Tax:
Description
Tax Form
Documentary Requirements
Tax Rates
Procedures
Deadlines
Related Revenue Issuances
Codal Reference
Frequently Asked Questions
Description
[return to index]
Tax Form
[return to index]
Documentary Requirements
1. Deed of Donation
5. Certified true copy(ies) of the latest Tax Declaration (front and back pages)
of lot and/or improvement, if applicable
For listed stocks - newspaper clippings or certification issued by the Stock Exchange as
to the par value per share
For unlisted stocks - Audited Financial Statements duly certified by an independent
certified public accountant with computation of fair market value per share at the time
of donation.
8. Proof of valuation of other types of personal properties, if applicable
Additional requirements may be requested for presentation during audit of the tax case depending
upon existing audit procedures.
[return to index]
Tax Rates
100,000.00 exempt
Notes:
1. Rate applicable shall be based on the law prevailing at the time of
donation.
2. When the gifts are made during the same calendar year but on different
dates, the donor's tax shall be computed based on the total net gifts during
the year.
brother, sister (whether by whole or half blood), spouse, ancestor
and lineal descendants; or
relative by consanguinity in the collateral line within the fourth
degree of relationship.
Effective July 28, 1992 to December 31, 1997 (Republic Act No.
7499)
50,000.00 exempt
brother, sister (whether by whole or half blood), spouse, ancestor and
lineal descendants; or
relative by consanguinity in the collateral line within the fourth degree
of relationship.
Effective January 16, 1981 to July 27, 1992 (Presidential Decree No.
1773)
1,000.00 exempt
brother, sister (whether by whole or half blood), spouse, ancestor and
lineal descendant; or
relative by consanguinity in the collateral line within the fourth degree
of relationship.
Please note that the donors tax rates will vary depending on the law
applicable at the time of the gift. The pertinent laws are as follow:
Commonwealth Act. No. 466 effective July 1, 1939 to September 14,
1950
Republic Act No. 579 effective September 15, 1950 to August 3, 1969
Republic Act No. 6110 effective August 4, 1969 to December 31,
1972
Presidential Decree No. 69 effective January 1, 1973 to January 15,
1981
Presidential Decree No. 1773 effective January 16, 1981 to July 27,
1992
Republic Act No. 7499 effective July 28, 1992 to December 31, 1997
Republic Act No. 8424 effective January 1, 1998 to present
[return to index]
Procedures
File the return in triplicate (two copies for the BIR and one copy for the
taxpayer) with any Authorized Agent Bank (AAB) of the RDO having
jurisdiction over the place of the domicile of the donor at the time of the
transfer. In places where there are no AAB, the return will be filed directly
with the Revenue Collection Officer or duly Authorized City or Municipal
Treasurer where the donor was domiciled at the time of the transfer, or if
there is no legal residence in the Philippines, with Revenue District No. 39 -
South Quezon City.
In the case of gifts made by a non-resident alien, the return may be filed with
Revenue District No. 39 - South Quezon City, or with the Philippine Embassy
or Consulate in the country where donor is domiciled at the time of the
transfer.
One-Time Transaction (ONETT) taxpayers shall mandatorily use the eBIRForms in filing all of their tax
returns. They may opt to submit their tax returns manually using the eBIRForms Offline Package in
the RDO having jurisdiction over the place of the domicile of the donor at the time of the transfer or
electronically through the use of the Online eBIRForms System. (Sec. 3(2) RR No. 6-2014)
Please note that the time of filing and payment will vary depending on the
law applicable at the time of gift.
[return to index]
Deadlines
Within thirty days (30) after the date the gift (donation) is made. A separate
return will be filed for each gift (donation) made on the different dates during
the year reflecting therein any previous net gifts made during the same
calendar year.
[return to index]
[return to index]
Codal Reference
Related Laws
Republic Act Nos. 579, 3062, 3676, 3850, 6110, 7499, 8424, 9159, 9275,
9500, 9647, 10066, 10072, 10073, 10083, 10174, 10390, 10618
[return to index]
A. In the Case of Gifts made by a Resident (Sec. 101 (A), NIRC as amended)
Dowries or donations made on account of marriage before its
celebration or within one year thereafter, by parents to each of their
legitimate, recognized natural, or adopted children to the extent of the
first P10,000
Gifts made to or for the use of the National Government or any entity
created by any of its agencies which is not conducted for profit, or to
any political subdivision of the said Government
Gifts in favor of an educational and/or charitable, religious, cultural or
social welfare corporation, institution, accredited non-government
organization, trust or philantrophic organization or research institution
or organization, provided not more than 30% of said gifts will be used
by such donee for administration purposes
B. In the Case of Gifts Made by a Nonresident not a Citizen of the
Philippines (Sec. 101 (B), NIRC as amended)
Gifts made to or for the use of the National Government or any entity
created by any of its agencies which is not conducted for profit, or to
any political subdivision of the said Government
Gifts in favor of an educational and/or charitable, religious, cultural or
social welfare corporation, institution, accredited non-government
organization, trust or philantrophic organization or research institution
or organization, provided not more than 30% of said gifts will be used
by such donee for administration purposes
C. Tax Credit for Donor's Taxes Paid to a Foreign Country (Sec. 101 (C), NIRC
as amended)
In General. - The tax imposed by this Title upon a donor who was a
citizen or a resident at the time of donation shall be credited with the
amount of any donor's tax of any character and description imposed by
the authority of a foreign country.
Limitations on Credit. - The amount of the credit taken under this
Section shall be subject to each of the following limitations:
- The amount of the credit in respect to the tax paid to any country shall not
exceed the same proportion of the tax against which such credit is taken,
which the net gifts situated within such country taxable under this Title bears
to his entire net gifts; and
- The total amount of the credit shall not exceed the same proportion of the
tax against which such credit is taken, which the donor's net gifts situated
outside the Philippines taxable under this title bears to his entire net gifts.
If the gift is made in property, the fair market value at that time will be
considered the amount of gift.
In case of real property, the taxable base is the fair market value as
determined by the Commissioner of Internal Revenue (Zonal Value) or fair
market value as shown in the latest schedule of values fixed by the provincial
and city assessor (MV per Tax Declaration), whichever is higher. (Sec. 88 and
102, NIRC as amended)
If there is no zonal value, the taxable base is the fair market value that
appears in the tax declaration at the time of the gift
4. For purposes of Donors Tax, what does the term Net Gift mean?
For purposes of the donors tax, NET GIFT shall mean the net economic
benefit from the transfer that accrues to the donee. Accordingly, if a
mortgaged property is transferred as a gift, but imposing upon the donee the
obligation to pay the mortgage liability, then the net gift is measured by
deducting from the fair market value of the property the amount of mortgage
assumed. (sec. 11, RR No. 2-2003)
5. Under R.A. No. 7166, any contribution in cash or in kind to any candidate
or political party or coalition of parties for campaign purposes shall not be
subject to the payment of any gift tax. What instance will it be subject to
Donors Tax?
Section 99 (C) of the Tax Code, as amended, provides that any contribution
in cash or in kind for campaign purposes shall be governed by R.A. No. 7166
or the Election Code.
Section 13 of the R.A. No. 7166 specifically states that any provision of law to
the contrary notwithstanding any contribution in cash or kind to any
candidate or political party or coalition of parties for campaign purposes,
duly reported to the Commission shall not be subject to the payment of any
gift tax (donors tax). Accordingly, the BIR can impose donors tax on
contributions of this nature. (Q-14, RMC No. 63-2009)
A legally adopted child is entitled to all the rights and obligations provided by
law to legitimate children, and therefore, donation to him shall not be
considered as donation made to stranger. (sec. 10, RR No. 2-2003)
Where property, other than real property referred to in Section 24 (D) of the
NIRC, as amended, is transferred for less than adequate and full
consideration in money or moneys worth, then the amount by which the fair
market value of the property exceeded the value of the consideration shall,
for the purpose of Donors Tax, be deemed a gift, and shall be included in
computing the amount of gifts made during the calendar year. (Sec. 100,
NIRC, as amended)
11. What entities are considered exempted from Donors Tax under special
laws?
The list below consists of entities considered Donors Tax exempt under
special laws including, but not limited to the following:
Rural Farm School (Sec. 14, R.A. No. 10618)
Peoples Television Network, Incorporated (Sec. 15, R.A. No. 10390)
Peoples Survival Fund (Sec. 13, R.A. No. 10174)
Aurora Pacific Economic Zone and Freeport Authority (Sec. 7, R.A. No.
10083)
Girl Scouts of the Philippines (Sec. 11, R.A. No. 10073)
Philippine Red Cross (Sec. 5, R.A. No. 10072)
Tubbataha Reefs Natural Park (Sec. 17, R.A. No. 10067)
National Commission for Culture and the Arts (Sec. 35, R.A. No. 10066)
Philippine Normal University (Sec. 7, R.A. No. 9647)
University of the Philippines (Sec. 25, R.A. No. 9500)
National Water Quality Management Fund (Sec. 9, R.A. No. 9275)
Philippine Investors Commission (Sec. 9, R.A. No. 3850)
Ramon Magsaysay Award Foundation (Sec. 2, R.A. 3676)
Philippine-American Cultural Foundation (Sec. 4, P.D. 3062)
International Rice Research Institute (Art. 5(2), PD 1620)
Task Force on Human Settlements (Sec. 3(b)(8), E.O. 419)
National Social Action Council (Sec. 4, P.D. 294)
Aquaculture Department of the Southeast Asian Fisheries Development
Center (Sec. 2, P.D. 292)
Development Academy of the Philippines (Sec. 12, PD 205)
Integrated Bar of the Philippines (Sec. 3, PD 181)
12. How do we determine the fair market value of the unlisted stocks?
In determining the value of the shares, the Adjusted Net Asset Method shall
be used whereby all assets and liabilities are adjusted to fair market values.
The net of adjusted asset minus the adjusted liability value is the indicated
value of the equity.
For purposes of this item, the appraised value of real property at the time of
sale shall be the highest among the following:
(b) The fair market value as shown in the schedule of values fixed by
the Provincial and City Assessors, or
(c) The fair market value as determined by Independent Appraiser. (RR NO.
6-2013) (Annex U)