Introduction to Transfer Taxation

Questions and Answers

Which type of transfer tax applies to both resident citizens and non-resident aliens regarding estate transfer?

Ad valorem tax (correct)

Fiscal tax

National tax

Proportional tax

What determines the situs of an estate transfer for a decedent?

Location at the point of death (correct)

Place where the estate is registered

Location of the decedent's primary residence

Place where the estate is valued

Which tax classification applies to a resident citizen who makes a donation while alive?

Inter-vivos (correct)

Mortis Causa

Direct tax

National tax

Non-resident aliens are subject to which type of transfer tax concerning donations in the Philippines?

Philippine donation tax Signup and view all the answers

Inter-vivos tax situs is determined by which of the following?

Place where the assets are located on the date of donation Signup and view all the answers

What is the primary characteristic of a bilateral transfer?

Requires consideration for the transfer Signup and view all the answers

Which of the following best describes a unilateral transfer?

Transfer where the donor receives nothing in return Signup and view all the answers

What type of transfer tax is imposed on donations made during a person's lifetime?

Donor's tax Signup and view all the answers

Who is primarily responsible for paying the estate tax?

The executor or administrator Signup and view all the answers

What defines a complex transfer?

Transfer for less than full consideration Signup and view all the answers

When does the valuation of property take place in the case of a unilateral transfer mortis causa?

At the time of the donor's death Signup and view all the answers

What is an example of a unilateral transfer?

Gift given during a birthday Signup and view all the answers

Which of the following statements is true regarding donor's tax and estate tax?

Donor's tax is a one-time tax Signup and view all the answers

What is the condition under which intangible personal properties of non-resident aliens are exempt from Philippine transfer taxes?

Their country must also exempt Filipino residents' intangible personal properties. Signup and view all the answers

What distinguishes a donation mortis causa from a donation inter-vivos?

Mortis causa donations are inspired by the thought of death. Signup and view all the answers

Which of the following is true about transfers in contemplation of death?

They are classified as mortis causa transfers. Signup and view all the answers

What must occur for an incomplete transfer to take place?

Future events or conditions must fulfill the transfer. Signup and view all the answers

When is a transfer intended to take effect at death classified?

As a mortis causa donation. Signup and view all the answers

What document expresses a decedent's intention regarding property distribution after death?

A last will and testament. Signup and view all the answers

Which type of donation occurs during the lifetime of the transferor?

Inter-vivos donation. Signup and view all the answers

Which of the following is NOT a characteristic of an incomplete transfer?

Ownership is transferred immediately. Signup and view all the answers

What must occur for a conditional transfer to be regarded as completed inter-vivos?

The transferee must fulfill the condition Signup and view all the answers

Under what circumstances do revocable transfers become completed?

Waiver to exercise the right of revocation Signup and view all the answers

What is a requirement for complex incomplete transfers to be taxable?

They must have been paid for less than full and adequate consideration Signup and view all the answers

What does the valuation for mortis causa transfers take into account?

Fair value at death less consideration upon transfer Signup and view all the answers

Which type of transfer is never subject to transfer taxes upon delivery?

Incomplete transfers Signup and view all the answers

Which condition would lead to void transfers?

Not conforming to legal validity requirements Signup and view all the answers

How is the valuation for inter-vivos transfers determined?

At the fair value of completion or perfection less consideration Signup and view all the answers

What is typically not a characteristic of complex incomplete transfers?

They can be completed during a legal dispute Signup and view all the answers

Study Notes

Transfer Taxation Overview

Transfer is the transmission of property from one person to another.
Types of transfer include Bilateral, Unilateral, and Complex.

Types of Transfers

Bilateral Transfers: Involve consideration (payment), categorized as onerous transactions (e.g., sales, barter).
Unilateral Transfers: Occur without consideration, referred to as gratuitous transactions (e.g., donations).
Complex Transfers: Occur when property is transferred for less than its full value.

Unilateral Transfers

Inter-vivos: Voluntary transfers during the donor's lifetime; subject to donor's tax.
Mortis Causa: Involuntary transfers upon the decedent's death; subject to estate tax.

Types of Transfer Taxes

Donor's Tax: Related to inter-vivos transfers, structured as an annual tax paid by the donor.
Estate Tax: Associated with mortis causa transfers, designed as a one-time tax paid by the decedent's executor or heirs.

Nature of Transfer Taxes

Classified as privilege taxes, ad valorem taxes, proportional taxes, national taxes, direct taxes, and fiscal taxes.

Taxpayer Classification

Residents: Subject to global taxation on inter-vivos donations and estate.
Non-Residents: Taxed only on Philippine donations and estates.

Situs of Transfer

Mortis Causa: Based on the decedent's location at death.
Inter-vivos: Based on the property's location at the time of the donation.

Reciprocity in Transfer Taxes

Exemption for intangible personal properties of non-resident aliens, provided their home country reciprocates for Filipino residents.

Classifying Donations

Inter-vivos: Transfers occurring during the lifetime of the transferor.
Mortis Causa: Transfers occurring upon the transferor's death.

Exceptional Rules on Transfer

Certain transfers, such as those in contemplation of death or intended to take effect at death, have specific tax rules.

Incomplete Transfers

Involve actual delivery without immediate ownership transfer, subject to future conditions.
Examples include conditional, revocable transfers, and those with reservation of title until death.

Complex Incomplete Transfers

Occur for less than adequate consideration and are subject to transfer tax if certain conditions are met regarding valuation and consideration during the transfer.

Valuation of Transfers

Mortis Causa: Based on fair value at death minus consideration.
Inter-vivos: Fair value at completion of transfer minus consideration.

Non-Taxable Transfers and Void Transfers

Void transfers are not subject to tax and include those prohibited by law or failing legal validity requirements.

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Description

This quiz covers the fundamentals of transfer taxation, focusing on the different types of property transfers: bilateral, unilateral, and complex. Understand the definitions and characteristics that differentiate these types of transfers. It's essential for students in the field of accountancy at Holy Angel University.