BIR Ruling

March 8, 1973 Atty. Amorsolo V. Mendoza 21 San Geronimo Street Magallanes, Village Makati, Rizal S i r : This refers to your letter dated January 30, 1973 requesting information on a query stated as follows: "On behalf of a client, I have the honor to request clarification of the provisions of the National Internal Revenue Code regarding the taxability of donations made by both spouses to their children or other persons. cdt In this connection, I wish to state that spouses are contemplating to donate to their children or other persons, shares of stocks and real estate which are registered in their respective individual names altho were acquired during their marriage. For purposes of computing the donor's tax, may the spouses be allowed to split into two the amount of the properties to be donated and file separate returns for their respective half of the donations and to pay the donor's tax on said basis accordingly." In reply, I have the honor to inform you as follows: Under Article 142 of the New Civil Code, all the properties acquired by either or both spouses during their marriage are presumed to be conjugal properties owned in common by them. (See also Article 143, New Civil Code). A gift to the children of conjugal partnership property is considered a single gift by the husband unless by common agreement the gift is made by both parents. In the first instance, only a single exemption can be claimed. In the second instance, each spouse is considered a donor of his or her half interest in the property and, therefore, each of them can claim separate exemption (Tang Ho, et. al, vs. B.T.A., et. al., G.R. No. L-5949, prom. Nov. 19, 1955 cited in B.I.R. Ruling No. 67-039 dated October 10, 1967); file separate returns for their respective half interest in such donations; and pay the corresponding donor's gift tax thereon in accordance with Section 109 of the Tax Code as amended by Presidential Decree No. 69. Likewise, in case of a donation of conjugal partnership property by both spouses to persons other than their children, each spouse shall be considered a donor of his or her half interest in the property donated. Each spouse should file separate returns of their respective half interest in the property donated and pay the corresponding donor's gift tax thereon. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue