FORMULA FOR DONORS TAX COMPUTATION:

GROSS GIFT P xxx

LESS: DEDUCTIONS xxx
NET GIFT P xxx

DONORs TAX DUE P xxx

If Relative (Donors Tax Table)
If Stranger (30%)

If 2 or more Donations within the same year, formula for the second and
succeeding donations:

GROSS GIFT P xxx

LESS: DEDUCTIONS xxx
NET GIFT P xxx
ADD: PRIOR NET GIFT xxx
TOTAL NET GIFT P xxx

DONORs TAX DUE P xxx

If Relative (Donors Tax Table)
If Stranger (30%)
LESS: Previous Donors Tax Paid xxx
DONORs TAX ON THE CURRENT DONATION xxx

GROSS GIFT

1. What should form part of the Gross Estate

a. If the Donor is RC, NRC, and RA Include all donations made within
and without the Philippines. This may include:
i. Real or Immovable Properties - Value: Whichever is higher
between the FMV and ZV at the time of the donation
ii. Tangible or Personal Properties Value: FMV at time of the
donation
iii. Intangible Personal Properties see page 183
iv. Sale of Property classified as Capital Asset for an insufficient
Consideration
- If the FMV is higher than the selling
price, then the difference between the
FMV and the Selling Price is considered
as the value of the gift (see illustration
on page 183-184, Cindy)

b. If the Donor is a NRA only his donation within the Philippines shall
form part of the gross gift. The Intangible personal property within
the Philippines is subject again to RECIPROCITY RULE.

2. See illustrations as to valuation on pages 185-186

EXEMPTIONS/DEDUCTIONS FROM GROSS GIFT

The following are the items that should be deducted from the Gross Gift

1. DOWRIES or GIFTS MADE ON ACCOUNT OF MARRIAGE:

a. Donation made by a parent to his child (legitimate, recognized

natural, or legally adopted) on account of marriage is allowed a
deduction in the amount of P 10,000.00 for each parent.
b. The deduction is allowed only if the donation was made:
i. By reason of marriage
ii. At any time prior to marriage or if after the marriage, should
be within one year only from the time of marriage (see
illustration on page 189 Mr. and Mrs. Santillan)

2. GIFTS MADE TO THE NATIONAL GOVERNMENT, ANY GOVERNMENT AGENCY

NOT CREATED FOR PROFIT, or ANY POLITICAL SUBDIVISION

3. GIFTS MADE TO THE FOLLOWING:

a. Educational, Charitable, religious, cultural, or social welfare
corporation/institution, Accredited NGO, Trust of Philanthropic
Organization, Research Institution or organization. (THE
ENUMERATION IS EXCLUSIVE meaning limited only to the
entities included in the enumeration)

b. Not more than 30% of the gift will be used for administrative
purpose

4. ENCUMBRANCE (MORTGAGE or LOAN) ON THE PROPERTY DONATED, IF

ASSUMED BY THE DONEE(See illustration on page 191-Raffy)

5. THOSE SPECIFICALLY PROVIDED BY THE DONOR AS DIMINUTION

(Reduction) OF THE PROPERTY DONATED (see illustration on page 191-
Imelda)

TAX RATES OF DONORS TAX (PLEASE STUDY ALL THE ILLUSTRATIVE

PROBLEMS on CHAPTER 14)

1. IF RELATIVE, use the Donors Tax Table on Page 196. The following are
considered relatives:

a. RELATIVE BY BLOOD: Brother or Sister (half or full), Spouse,

Ascendants, and Descendants
b. Collateral relatives up to 4th Civil Degree (1st Cousin)

2. IF STRANGER, (not qualified in either a or b in no. 1), the tax rate is

outright 30%

Study carefully the illustration on page 198-200 (Mr. and Mrs. Polo) IF
YOU HAVE ANY CLARIFICATION PRIOR TO THE EXAM, Please contact me
at 09988688768. THANKS