Introduction to Transfer Taxation

Question 1

Types of Transfers

Answer 1

Bilateral transfers
Unilateral transfers
Complex transfers

Question 2

Examples of Bilateral Transfers

Answer 2

Sale

Barter

Question 3

Taxation Rules on Sale or Barter

Answer 3

Business tax (for business sellers)
Income tax (for both business and non-business sellers)

Question 4

Types of Unilateral Transfers

Answer 4

Donation

Succession

Question 5

Donation inter vivos

Answer 5

Donation

Question 6

Donation mortis causa

Answer 6

Succession

Question 7

Complex transfers

Answer 7

Transfers for less than adequate consideration

Question 8

Tax rules on complex transfers

Answer 8

Transfer element - subject to transfer tax

Exchange element - subject to business tax

Question 9

Transfer element of complex transfers are generally considered

Answer 9

Donation inter vivos, unless

a. The sale was made in contemplation of the death of the seller
b. Titled to be transferred upon the death of the seller

Question 10

Rationale of Transfer Taxation

Answer 10

The Tax Evasion or Minimization Theory
Tax Recoupment Theory
The Benefit Received Theory
The State Partnership Theory
The Wealth Redistribution Theory
The Ability to Pay Theory

Question 11

Nature of Transfer Taxation

Answer 11

1. Privilege tax
2. Ad valorem tax
3. Proportional tax
4. National tax
5. Direct tax
6. Fiscal tax

Question 12

Extent of Taxation of Residents or Citizens

Answer 12

Global transfers of property

Question 13

Extent of Taxation of Non-Resident Aliens

Answer 13

Philippine transfers of property

Question 14

Incorporation Tests

Answer 14

Determination of citizenship of juridical persons

Question 15

Situs of Transfer

Answer 15

Location of the property

1. Date of donation (donation)
2. Date of death (succession)

Question 16

Exceptional Rules on Transfers

Answer 16

Transfer in contemplation of death
Transfer intended to take effect at death
Incomplete transfers

Question 17

Inter-vivos transfer with thought of death

Answer 17

Mortis causa

Question 18

Inter-vivos transfer with motive associated with life

Answer 18

Inter-vivos

Question 19

Motives associated with life

Answer 19

To reward services rendered
To relieve the donor of the burden of management of the property
To save on income tax
To see children financially independent
To see children enjoy the property while the decendent still lives
To settle family disputes

Question 20

“Last will and testament”

Answer 20

A document expressing the decendent’s desire on how his properties will be distributed after his death

Question 21

Types of incomplete transfers

Answer 21

Conditional transfers
Revocable transfers
Transfers with reservation of title to property until death

Question 22

How are conditional transfers completed?

Answer 22

Fulfillment of the condition by the transferee or

Waiver of the condition by the transferor

Question 23

How are revocable transfers completed?

Answer 23

Waiver by the transferor to exercise their right to revocation or
The lapse of the transferor’s right to revocation

Question 24

How are transfers with reservation of title to property until death completed?

Answer 24

The death of the decendent

Question 25

Are physical transfers = completed transfers?

Answer 25

No

Question 26

A transferor unilaterally transfers property to their son/daughter. If the transferor dies before a condition is fulfilled or before the right to revocation lapsed, and it (either condition or right to revocation) is not waived, which type of unilateral transfer is it?

Answer 26

Mortis causa

Question 27

Test of Taxability of Complex Incomplete Transfers

Answer 27

@ date of delivery of the property, consideration paid < full and adequate consideration @ date of completion of the transfer, FV of property ≥ consideration paid

Question 28

Non-Taxable Transfers

Answer 28

Void transfers | Quasi-transfers

Question 29

Void transfers

Answer 29

Prohibited by law or | Do not conform to legal requirements for their validity

Question 30

Quasi-transfers

Answer 30

Transmissions of property which will never involve transfer of ownership

Question 31

Examples of void transfers

Answer 31

Donation of properties not owned by the donor Donation between spouses Donations which do not manifest all essential requisites to validity such as donations refused by the donee Donations that do not conform to formal requirements such as oral donation of real properties

Question 32

Examples of quasi-transfers

Answer 32

Transmission of the property by the usufructuary to the owner of the naked title Transmission of the property by a trustee to the real owner Transmission of the property from the first heir to the second heir in accordance with the desire of a predecessor

Question 33

Examples of intangible properties

Answer 33

Financial assets | Accounting intangible assets

Question 34

Who does the reciprocity rule apply to?

Answer 34

Non-Resident Aliens