Practice question
A person receives property through a genuine gift qualifying under32(B)(3), then earns interest from investing it. The person says exclusion of the gifted property automatically excludes every later investment return. Which is correct?
- Every return from gifted property is permanently excluded in all circumstances.
- The gift exclusion does not automatically extend to income subsequently derived from the property.
- The recipient never owns the investment income.
- Interest becomes a second gift automatically even when paid under an investment contract.
- All gains cease to be income once a gift is involved.
Legal references
- NIRC, Sections 5-7,22-23 and32, as enacted in RA8424 and subject to the cited later amendments: https://lawphil.net/statutes/repacts/ra1997/ra_8424_1997.html
- RA12214, May29,2025, CMEPA, including amended NIRC Sections22,25 and32: https://lawphil.net/statutes/repacts/ra2025/ra_12214_2025.html
- CIR v. Shinko Electric Industries, G.R.226287, July6,2021, main decision, income concept and requisites: https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/67666
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