Who is liable for the income tax on donated property after donation but before registration in the name of the donee?

Who is liable for the income tax on donated property after donation but before registration in the name of the donee?

• A. The donor
• B. The donee
• C. The government
• D. The tax authority

Answer: (B)

When property is donated, the income tax liability on the donated property typically shifts to the donee (the recipient of the gift) after the donation is made, even if the property has not yet been registered in the donee's name. This principle is grounded in the notion that any income generated by the property or any tax implications associated with that property now legally pertain to the donee, despite the administrative status of registration. The donee assumes responsibility for any taxes related to the property because they are the new owner once the donation has been completed, regardless of the registration process. This includes any income tax obligations that might arise from the property, such as rental income or gains if the property is sold in the future. Consequently, once the donation is effective, the donee is liable for related income tax, making them responsible for managing the tax implications of the property. The other choices relate to parties that do not directly hold liability for the taxes on the donated property. The donor is relieved of tax obligations once the gift is given. The government and tax authority do not assume liability; rather, they are the entities that enforce tax collection.

When property is donated, the income tax liability on the donated property typically shifts to the donee (the recipient of the gift) after the donation is made, even if the property has not yet been registered in the donee's name. This principle is grounded in the notion that any income generated by the property or any tax implications associated with that property now legally pertain to the donee, despite the administrative status of registration.

The donee assumes responsibility for any taxes related to the property because they are the new owner once the donation has been completed, regardless of the registration process. This includes any income tax obligations that might arise from the property, such as rental income or gains if the property is sold in the future. Consequently, once the donation is effective, the donee is liable for related income tax, making them responsible for managing the tax implications of the property.

The other choices relate to parties that do not directly hold liability for the taxes on the donated property. The donor is relieved of tax obligations once the gift is given. The government and tax authority do not assume liability; rather, they are the entities that enforce tax collection.