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All Jurisprudence based

0 tracked cards Commercial and Taxation Laws

A resident Filipino, Mr. X, makes gratuitous inter vivos gifts: (i) cash of Php 600,000 to his nephew, N; (ii) a parcel of land valued at Php 3,000,000 donated to Hope Foundation, a registered charitable foundation. The gifts are unconditional and not in exchange for services. (a) For each gift, identify the taxpayer and the event taxed under Donor's Tax. (b) Explain the basis for computing donor's tax and discuss whether any exemptions may apply to either gift, including whether gifts to government or to qualified charitable institutions may be exempt. (c) If the land gift to Hope Foundation were instead made by will (i.e., a testamentary transfer), which tax would apply and why?

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Taxpayer: Mr. X; (a) Gift 1 is a gratuitous inter vivos gift subject to Donor's Tax; Gift 2 is a gratuitous inter vivos gift to a registered charitable foundation and is exempt from Donor's Tax; (b) Basis: Donor's Tax is computed on the net gifts; Gift 1 is taxable; Gift 2 is exempt; (c) If the land gift were made by will, the transfer would be taxed under the Estate Tax. Taxpayer: The nephew N; (a) The donor does not bear any tax; The event taxed would be the nephew's income; (b) Basis: Not applicable; (c) Testamentary transfer would be exempt. Taxpayer: Mr. X; (a) Gift 1 is taxed; Gift 2 is exempt only if the donee is the government, not a private foundation; (b) Basis: Gift 1 uses its cash value; Gift 2 uses the FMV; (c) If by will, the transfer would be taxed under the Estate Tax. Taxpayer: Mr. X; (a) Gift 1 is taxed; Gift 2 is taxed; (b) Basis: The tax base is the combination of both gifts; (c) Testamentary transfer would be taxed under Donor's Tax.

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