Tax Imposed on the Donated Conjugal Property

July 19, 1958 BIR RULING NO. 378-58 Mr. Carlos J. Valdes Attorney-at-Law 6th Floor, San Luis Terraces San Luis, Ermita, Manila S i r : In reply to the queries propounded in your letter of July 1, 1958, I have the honor to inform you that, if as represented therein the property to be donated by your clients is presently mortgaged to a bank for P200,000.00, and the donees will undertake the payment and will actually pay the said mortgage debt, the amount of the gift will be the excess of the fair market value of such property over the unpaid amount of the mortgage at the time the donation is perfected. However, this is without prejudice to the re-classification of the donation by this Office in case the surrounding facts and circumstances will show that the transfer is made in contemplation of death within the purview of Section 88(b) of the Tax Code. Your observation that if the property to be donated is conjugal property and both parents will make the donation, the donor's gift tax will be applied to the husband and to the wife as distinct individuals, is in order. LLphil Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue