Name : ___________________ Score: ____

Section : ___________________
Subject : 1225B/1213A TAX 2__
Class Schedule : MWF (4:00 pm – 5:00pm/5:00pm-6:00pm)
Teacher : Merla A. Tampipi, CPA, MBA
Date : April 02, 2020 (Friday)

MODULE 4
Learning Activity Sheet # 4

Lesson / Topic : Problems on Basic Concept of Donation; Donor’s

Tax credit; Nature and Concept of business tax; Three(3) major Internal
Revenue Taxes; and some Theories on the basic concept of succession.
(Tax 2-Third Quarter Examination)

Learning Target(s): To determine the Net Taxable gift and Tax due for
each type of Donations made by an individual whether single or married;
prepare the cumulative presentation of the donors’ tax return; determine the
Net Taxable gift, Tax due and Tax still due after deducting the foreign tax
credit allowed using the formula by country or by total; describe the nature
and concept of business taxes; and differentiate the three (3) major business
taxes in the National Internal Revenue Code; and define value-added tax
and its applicability.

Reference(s): Ballada, Winlu. Transfer and Business Taxation, Made Easy,

2019 Issue, 7th Edition

Concept/ Digest :
“Business “or “in the course of trade of business “ means
The regular conduct or pursuit of a commercial or economic activity,
Including transactions incidental thereto, by any person or government
Entity. The requisites are: a). The activity must be a commercial or
Economic activity; and b). There must be regularity in the activity.

Questions/Problems:

I. True or False. Write T if the statement is true and F if the statement is

wrong on the space provided.

1. ___________When there is no reciprocity, the transfer of intangible

personal property located in the Philippines of a non-resident alien
donor is not subject to tax.
2. ___________If the donor was a non-resident alien, only his property
located in the Philippines shall form part of his gross gift.

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 3. ___________If the gift is made in property, the fair market value
thereof at the time of the gift shall be considered the amount of the
gift.
4. ___________When there is reciprocity, the transfer of intangible
personal property located in the Philippines of a non-resident alien
donor is subject to tax.
5. ___________So that the reciprocity rule may apply, the non-resident
alien must be a resident and citizen of one particular foreign country at
the time of donation.
6. ___________The gross estate of a married decedent under the system
of conjugal partnership of gains during the marriage is a mixture of his
exclusive property and conjugal property.
7. ___________The donor’s tax return shall be filed within 30 days after
the date the gift is made or completed.
8. ___________Dowry is a deduction of gross gift on account of a
birthday celebration of a son or daughter.
9. ___________The gross gift of a resident citizen, a non-resident citizen
or a resident alien donor shall include all his property wherever his
property located .
10. __________ If the Donor was a non-resident alien, only his
property located in the Philippines shall form part of his gross gift.
11. __________ The person who disposes of the thing or right is
called the donee while the one who accepts it is the donor.
12. ________ _Donor’s tax supplements the estate tax and
compensates for the loss of income tax.
13. ________ _The maximum amount allowable as deduction from
gross estate for funeral expenses is P300,000.
14. _________Expense of the prayer vigils succeeding the burial are
deductible from gross estate.
15. _________The amount for inclusion in the deduction from gross
estate for family home may be less than P10,000,000.

II. Multiple Choice : Write the letter that corresponds to the correct
answer on the space provided. Solution is a must for questions that
need computations.

_____1. The location of the property is important in determining whether the

property shall be included or not in the gross estate of a decedent who was a

a. Resident citizen c. Non-resident alien

b. Non-resident citizen d. Resident alien

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_____2. The reciprocity clause in the donor tax law applies to the estate of
a. Resident citizen c. Non-resident alien
b. Non-resident citizen d. Resident alien

_____3. When a marriage settlement was not agreed upon and the
marriage was contracted before August 3, 1988, the marriage settlement
shall be

a. Absolute community
b. Conjugal partnership of gains
c. Complete separation of property
d. Any other regime

______4. A family home worth P 10,200,000 constituted out of the income

of the wife during the marriage is a deduction from the gross estate of the
husband at

a. 1,000,000 b. 600,000 c. 1,200,000 d. 5,100,000

_______5. Dona Agata is beaming with pride because his only son placed
first in the recent Medical licensure examinations. As a reward, she gifted
him with the following:

Fishpond in the Philippines P2,185,000

Van in the Philippines 650,000

Patent exercised in US 550,000

Time deposit in India 1,250,000

Shares of stock in Singapore 450,000

If Dona Agata were a resident citizen of the Philippines, how much is her
gross gift?

a. P5,085,000 b. P 2,835,000 c. 2,250,000 d. P 2,185,000

_________6. If Dona Agata were a resident alien, how much greater shall
her gross gift be over that if she were a resident citizen?

a. P5,085,000 b. P 2,185,000 C. 2,250,000 d. P 2,835,000

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 _______7. An item of property with a fair market value at the time of
donation of P 100,000 but with a mortgage for an indebtedness of P 40,000
which has yet to mature at the time of donation shall be

a. included in the gross gift of P 60,000

b. included in the gross gift of P 100,000
c. not included in the gross gift because the entire property is answerable
for the indebtedness.
d. included in the gross gift at P 100,000 but with a parenthetical note that
is mortgage for P40,000.

________8. Mr. Santos , a philanthropist, donated a 1,000 sq. Meter lot to

the City of Makati to be set up as a basketball court. The lot has a cost of P4
million and fair market value of P5 million.

How much must be included as part of Mr. Santos ‘s gross gift?

a. P 4 million b. P5 million c. P 1 miilion d. P 0

________9. How much of the gross gift is exempt?

a. P 4 million b. P5 million c. P 1 million d. P 0

_________10. Mr. Santos’s net gift is

a. P 5 million b. P 5 million c. P 1 million
d. P 0
_________11. Mr. & Mrs. Tan gifted their daughter, Cecil, with a Mercedes
Benz on account of her forthcoming marriage to Dante. The luxury car has a
fair market value of P10 million at the time of donation.

The donor’s tax on Mr. Tan’s net gift is

a. P285,000 b.300,000 c. 600,000 d. None of the above

__________12. The donor’s tax on Mrs. Tan’s net gift is

a. 300,000 b. 285,000 c.600,000 d. None of the above

__________13. Mr. And Mrs. Rosal gifted their son Armando with a BMW on
account of his forthcoming marriage to Rosa. The luxury car has a market
value of P 6 million at the time of donation.

__________14. How much must be included as part of Mr. Rosal’s gross

gift?

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 a. 4 million b. 2 million 3. 1 million d. 3 million

________15. How much must be included as part of Mrs. Rosal’s gross gift?

a. 4 million b. 3 million 3. 1 million d. 2 million

________16. If Mrs. Rosal is entitled for an exemption, then for how much?
a. 250,000 b. 100,000 c. 300,000 d.0

_________17. How much is Mr. Rosal’s net gift?

a. 2,750,000 b. 2 million c. 3 million d. 1,990,000

__________18.Mr. Ramos, unmarried, gifted a house and lot to his parents,

which he shared with them. He acquired the property for P 750,000. If at
the time of Mr. Ramos’s donation, the property has a fair market value of
P 1.5 million, the amount that should properly be included as part of gross
gift is
a. 750,000 b. 1.5 million c. 1 million d. 0

___________19. The deduction that may be claimed is

a. 250,000 b. 1.5 million c. 1 million d. 0

___________20. The donor is a resident citizen of the Philippines with the

following data about his donation.

Net gift Foreign Estate tax paid

Philippines P6,000,000 -
Singapore 3,000,000 P 375,000
Malaysia 2,000,000 265,000

___________21. Total gross gift of the donor is

a. P 11,000,000 b.P6,000,000 c. P3,000,000 d. P2,000,000

____________22. The Total exempt gift amounted to

a. P250,000 b. P10,000 c. 300,000 d. None of the

above
____________23. The total net gift is

a. P10,750,000 b. P9,000,000 c. P3,000,000 d. P11,000,000

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__________24. The Philippine donor’s tax payable before credit for
foreign estate taxes is:

a. P645,000 b. P 200,000 c. P1,415,000 d. P1,000,000

_________25. The allowable tax credit for Singapore is:

a. P 175,909 b. 375,000 c. P200,000 d. P1,000,000

_________26. The allowable Tax credit for Malaysia is :

a. P117,273 b. 1,415,000 c. P200,000 d. P1,000,000

________27. The Philippine donor’s tax still due is

a. 351,819 b. 782,7237,27 c. 632,272,73 d. P 2,000,000

________28. It is a tax levied on the transmission of property from a prior
decedent to his heirs.

a. donor’s tax b. estate tax c. decedent ‘s tax d. heirs’ tax

________29. A deduction the maximum of which is P10 million but the

amount claimed less than the maximum.
a. family home
b. vanishing deduction
c. standard deduction
d. medical expenses
__________30. Unsettled obligation of the decedent
a. claims against insolvent person
b. unpaid mortgage
c. casualty loss
d. claim against the estate

………….………………………………………………………………..

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