What determines the income tax liability of the donated property before it is registered in the donee's name?

What determines the income tax liability of the donated property before it is registered in the donee's name?

• A. The donee is liable for any income generated from the property.
• B. The donor retains full tax liability until registration.
• C. The income tax is waived if not registered.
• D. The tax is assessed at the time of donation, regardless of registration.

Answer: (A)

The correct answer indicates that the donee is liable for any income generated from the property. This means that once property is donated, the responsibility for any income or gains that arise from that property shifts to the donee, even before the official transfer of registration is completed. In tax practice, the donee assumes the benefits and burdens of ownership, which includes any associated income taxes from the property, regardless of whether the property has been formally registered under their name yet. This principle emphasizes the fact that ownership for tax purposes is often determined by the right to control and benefit from the property, rather than merely the legal title. The other options do not accurately reflect the rules governing tax liability for donated property. For instance, the donor does not retain full tax liability once the property is donated; instead, the donee takes on that responsibility. The idea that income tax is waived if the property is not registered is also misleading, as tax liabilities are determined by the condition of the property itself and its generation of income, not by the registration status. Finally, the notion that tax is assessed at the time of donation, regardless of registration, would suggest that the donor remains responsible for future income, which is not aligned with tax law practices concerning the timing

The correct answer indicates that the donee is liable for any income generated from the property. This means that once property is donated, the responsibility for any income or gains that arise from that property shifts to the donee, even before the official transfer of registration is completed.

In tax practice, the donee assumes the benefits and burdens of ownership, which includes any associated income taxes from the property, regardless of whether the property has been formally registered under their name yet. This principle emphasizes the fact that ownership for tax purposes is often determined by the right to control and benefit from the property, rather than merely the legal title.

The other options do not accurately reflect the rules governing tax liability for donated property. For instance, the donor does not retain full tax liability once the property is donated; instead, the donee takes on that responsibility. The idea that income tax is waived if the property is not registered is also misleading, as tax liabilities are determined by the condition of the property itself and its generation of income, not by the registration status. Finally, the notion that tax is assessed at the time of donation, regardless of registration, would suggest that the donor remains responsible for future income, which is not aligned with tax law practices concerning the timing