PRELIMS

• Mother of the donor's spouse is considered a stranger for purpose of donor's taxation.
• Exempt from gift tax under special laws:

  • Donation to Integrated Bar of the Philippines
  • Donation to Development Academy of the Philippines
  • Donation to International Rice Research Institute
• All the gifts made on the same date pay one donor's tax only.
• False : In vanishing deduction, there should always be two deaths within five years from receipt of property.
• False : In two acquisition by onerous title at different dates, but both within five year from present death, there may be one consolidated computations only for the vanishing deductions.
• Estate Tax


  An excise tax because the object of which is the shifting of economic benefits and enjoyment of property from the dead to the living.
• True : Estate tax is a tax imposed on a person's exercise of his right to gratuitously dispose his property upon his death.
• An executor oradministrator, after paying the estate tax, and to escape a future liability for a deficiency estate tax, must secure a written discharge from a personal liability from the Commissioner of Internal Revenue
• Rules of Income Taxation:

  • A taxable estate is taxable like an individual.
  • An estate may claim as deduction from gross income distribution of income to the heirs.
  • A taxable estate estate may claim as deduction casualty loss as long as not claimed as a deduction from gross estate in the course of determining estate.
• Estate tax is an excies tax. It is a tax on the right to transfer property ag death and on certain transfers which are made by law the equivalent of testamentary disposition.
• Upon effectivity of TRAIN Law, estate tax is a proportional tax. It is no longer based on a graduated tax rate but to a fixed rate of 6% on the net taxable estate.
• Excise tax is an ad valorem tax. It is assesed based on the net value of the estate transferred.
• Conjugal partnership of gains, absolute community of property, and complete separation are valid regimes that may govern property relation between spouses.
• Absolute Community of Property


  under this regime, the husband and the wife place in a common fund the proceeds, products, fruits, and income from their separate property and those acquired by either or both spouses through their effort or by chance.
• TRUE : Property acquired during marriage through gratuitous title is exclusive under conjugal partnership of gains.
• Property acquired gratuitously before marriage is community under absolute community of property.
• Property acquired during marriage in exchange of exclusive property is exclusive under absolute community of property.
• For donor's tax purposes, unlisted preference shares should be valued at par value, and listed preference shares should be valued at closing value.
• Debts attached to properties donated are deductible from gross gift if assumed by the donee.
• Donor's tax shall be levied, assessed, collected, and paid upon the transfer of property by any person, resident or non resident, as a gift.
• The donor's tax shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or ingangible.
• When an indebtedness is cancelled without any service rendered by the debtor in favor of the creditor, the forgiveness of the debt will result to taxable indirect donation.
• The personal properties of a non resident alien, would not be included in the gross estate if the intangible personal property is in the Philippines and the reciprocity clause of the estate tax law applies.
• True : Sale by agricultural cooperatives to non-members can only be exempt from VAT if the producer of the agricultural product sold is the cooperative itself. If the cooperative is not the producer (e.g. trader), then only those sales tk its members shall be exempted from VAT.
• True : Sale or importation of agricultural food products in their original estate is exempt from VAT irrespective of the seller and buyer therof.
• True: The VAT on sale of goods shall be determined based on gross selling price. As such, output on sale of goods is substantiated by the VAT invoice.
• Input tax on purchase of raw materials is an imput tax that can be refunded, converted into tax credit certificates or carried over to the next quarter at the option of the VAT registered tax payers.
• Consequences of optional registration under the VAT system:

  • Shall be required to submit a monthly VAT declaration and quarterly VAT return.
  • Shall be allowed to claim transitional input VAT during the first year of VAT registration.
  • Optional VAT registration shall be irrevocable for three years from the quarter the election was made (forever for radio and television network)
• The basis of value-added tax on sale of real property under cash basis or deferred payment plan is the higher between the selling price stated in the sales document or market value.