It is a tax on transfer without consideration of property between two or more persons who are living at the time of transfer
Kinds of Donation
- Donation Inter Vivos – one made between living persons which perfected from the moment the donor knows of the acceptance of the donation by the donee. Subject to gift tax.
- Donation Mortis Causa- one which takes effect upon death of the donor. Subject to estate tax.
Type of Transfer
- Normal Course of Business – Business Tax
- Casual Transfer – Sale of Property – Capital Gains Tax 6%
- Intervivos – during lifetime.
- Mortis Causa – in contemplation of death.
Transfers by way of Donation included in the Estate:
a. Revocable Transfers
b. Transfers where the donor reserves the right to the income of property until death.
c. Transfers where the donor reserves the right to the possession or enjoyment of property until death.
d. Transfers in contemplation of death or thought of death distinguished from motives associated with life must be impelling cause of the transfer. RSIDE
- Relieve from the donor of burden of management of property.
- Save on income taxes.
- Independent (make children independent).
- Disputes (family disputes).
- Enjoy (children to enjoy the property while the donor still alive).
- Included in Gross Estate provided there was no consideration or adequate and full consideration in money or money’s worth at the time of transfer.
*Donation between husband and wife are void but not in all cases.