Tuesday, January 20, 2009

Philippine bar exam questions 2008 (Taxation Q14)

Spouses Jose San Pedro and Clara San Pedro, both Filipino citizens, are the owners of a residential house and lot in Quezon City. After the recent wedding of their son, Mario, to Maria, the spouses donated said real property to them. At the time of donation, the real property has a fair market value of P2 million.
a) Are Mario and Maria subject to income tax for the value of the real property donated to them? Explain. (4%)
b) Are Jose and Clara subject to donor’s tax? If so, how much is the taxable gift of each spouse and what rate shall be applied to the gift? Explain. (4%)

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