Which of the following transactions is subject to donor's tax?

The transaction that is subject to donor's tax involves the sale of a commercial building valued at P20 million for only P12 million. In this scenario, the difference in value—P8 million—represents a gift element since the property is being sold for significantly less than its fair market value.

When a property is sold at a price lower than its market value, the difference is considered a deemed gift because the seller is effectively transferring wealth to the buyer without adequate compensation in return. This concept is rooted in tax law, which seeks to account for any unreported gifts made through such undervalued transactions.

Other scenarios, like the sale of a car or a residential lot at a discounted price, do not inherently involve the same transfer of wealth unless there is a significant difference between the sale price and the fair market value. Simply selling items for less than market value does not automatically trigger donor's tax liability unless the undervaluation is substantial enough to suggest a gift was made.