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    Assignment

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    Lois Jose
    1. Donating shares of a foreign corporation's own stock to a resident employee is not subject to donor's tax, however if 85% of business is in the Philippines it may be taxed. Shares given as compensation are taxable income. 2. Advising splitting a P200,000 gift into two donations of P100,000 in different years to avoid higher tax brackets and donor's tax, as the annual exemption would apply to each gift. 3. The BIR was correct that the wife's renunciation of her share of conjugal property in favor of children was a taxable gift, as it was a lifetime transfer without consideration.

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    Assignment

    Uploaded by

    Lois Jose
    124 views2 pages
    1. Donating shares of a foreign corporation's own stock to a resident employee is not subject to donor's tax, however if 85% of business is in the Philippines it may be taxed. Shares given as compensation are taxable income. 2. Advising splitting a P200,000 gift into two donations of P100,000 in different years to avoid higher tax brackets and donor's tax, as the annual exemption would apply to each gift. 3. The BIR was correct that the wife's renunciation of her share of conjugal property in favor of children was a taxable gift, as it was a lifetime transfer without consideration.

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    1. Donating shares of a foreign corporation's own stock to a resident employee is not subject to donor's tax, however if 85% of business is in the Philippines it may be taxed. Shares given as compensation are taxable income. 2. Advising splitting a P200,000 gift into two donations of P100,000 in different years to avoid higher tax brackets and donor's tax, as the annual exemption would apply to each gift. 3. The BIR was correct that the wife's renunciation of her share of conjugal property in favor of children was a taxable gift, as it was a lifetime transfer without consideration.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    124 views2 pages

    Assignment

    Uploaded by

    Lois Jose
    1. Donating shares of a foreign corporation's own stock to a resident employee is not subject to donor's tax, however if 85% of business is in the Philippines it may be taxed. Shares given as compensation are taxable income. 2. Advising splitting a P200,000 gift into two donations of P100,000 in different years to avoid higher tax brackets and donor's tax, as the annual exemption would apply to each gift. 3. The BIR was correct that the wife's renunciation of her share of conjugal property in favor of children was a taxable gift, as it was a lifetime transfer without consideration.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    1.

    X, a multinational corporation doing business in the Philippines, donated


    100
    shares of stock of said corporation to Mr. Y, its resident manager in the
    Philippines.

    a. What is the tax liability, if any, of X


    corporation?

    b. Assuming the shares of stocks were given to Mr. Y in consideration of his


    service to corporation, what are the tax implication? Explain.

    2. Your bachelor client, a Filipino residing in Quezon City, wants to give his
    sister a git of P200,000. He seeks your advice, for purpose of reducing if not
    eliminating the donor's tax on the gift, on whether it is better for him to give
    all of the P200,000 on Christmas 2001 or to give P100,000 on Christmas
    2001 and the other P100,000 on Jan. 1, 2002. Please explain your advice.

    3. In the settlement of the estate of Mr. Barbera who died intestate, his
    wife renounced her inheritance and her share of the conjugal property in
    favor of their children. The BIR determined that there was a taxable gift and
    thus assessed Mrs. Barbera as a donor. Was the BIR correct?

    1.
    A. Foreign corporations effecting a donation are subject to donor’s tax only if the property
    donated is located in the Philippines. Accordingly, donation of a foreign corporation of its
    own shares of stock in favor of resident employees is not subject to donor’s tax. However, if
    85% of the business of the foreign corporation is located in the Philippines or the shares
    donated have acquired business situs in the Philippines, the donation may be taxed in the
    Philippines subject to the rule of reciprocity.

    B. If the shares of stocks were given to Mr. Y in consideration of his services to the corporation,
    the same shall constitute taxable compensation income to the recipient because it is a
    compensation for services rendered under an employer-employee relationship, hence, subject
    to income tax
    2. I would advice him to split the donation. Giving the P200,000 as a one-time donation
    would mean that it will be subject to a higher tax bracket under the graduated tax structure,
    thereby necessitating the payment of donor’s tax. On the other hand, splitting the donation
    into two equal amounts of P100,000 given on two (2) different years will totally relieve the
    donor from the donor’s tax because the first P100,000 donation in the graduated brackets is
    exempt (Sec. 99, NIRC). While the donor’s tax is computed on the cumulative donations, the
    aggregation of all donations made by a donor is allowed only over one calendar year.

    3.The BIR is correct that there was taxable gift only insofar as the renunciation of the share of
    the wife in the conjugal property is concerned. This is a transfer if property without
    consideration which takes effect during the lifetime of the transferor/wife and this qualifies as a
    taxable gift.

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