D. Accounting Periods
1. Definition of accounting period ............................................ 471 2. Kinds of accounting period ................................................... 471 3. General rule and exceptions................................................. 471 4. Definition of taxable year ..................................................... 472 5. Length of taxable year.......................................................... 472 6. Taxpayers under calendar year ........................................... 473 7. Taxpayers under the fiscal year basis ................................. 473 8. Returns for less than twelve (12) months period ................ 473 9. Period in which items of gross income included.................. 474 10. Period for which deductions and credits taken ................... 473 11. Change of accounting period ................................................ 473
20. Installment sales of real property by individuals ............... 449 21. Filing of returns of installment payments and payment of the tax ............................................... 450 22. Deferred payment sale of real property not on installment plan............................................... 450 23. Repossession on deferred payment sale .............................. 452 24. Change from accrual to installment method....................... 452 25. Accounting methods for long-term contracts ...................... 452 26. Changes in accounting method ............................................ 454
E. Tax Accounting Among Controlled Taxpayers
17. Returns in case of two or more trusts.................................. 496 18. Miscellaneous returns .......................................................... 497 19. Late/out-of-district returns .................................................. 497 20. Preparation and submission of financial statements accompanying tax returns .......................................... 499 21. Return filed by Commissioner .............................................. 502 22. Electronic filing and payment system ................................. 502 23. Extension of time to file return ............................................ 504 24. Disposition of returns ........................................................... 505 25. Publication of lists of taxpayers and filers .......................... 505 xix 1. Definition of income tax return ............................................ 479 2. Classes of income tax returns .............................................. 479 3. General requirements of income tax returns ...................... 479 4. Sufficiency of a return .......................................................... 480 5. Individuals required to file income tax returns .................. 480 6. Individuals not required to file income tax returns ............ 480 7. Rules on individual returns ................................................. 481 8. Date of filing of quarterly income tax return ..................... 485 9. Substituted filing of income tax returns ............................. 485 10. Inspection of individual income tax returns ....................... 486 11. Corporations required to file returns ................................... 486 12. Rules on corporation and partnership returns ................... 486 13. Quarterly income tax return and adjustment return ........................................................................... 489 14. Computation and payment of minimum corporate income tax.................................................................... 491 15. Returns of general professional partnerships ..................... 495 16. Fiduciary returns.................................................................. 496 1. Definition of terms ................................................................ 475 2. Allocation of income and deductions.................................... 476 3. Purpose and scope of the law ............................................... 476 4. Determination of true net income of controlled taxpayer ....................................................................... 477 5. Transfer pricing guidelines ................................................. 477 Chapter XIV. — Filing of Returns and Payment of Tax A. Income Tax Returns
THE LAW ON INCOME TAXATION
B. Inventories
1. Definition of inventory .......................................................... 455 2. Need for inventories ............................................................. 455 3. What inventories should include ......................................... 456 4. Requirements for use of inventories .................................... 456 5. Consistency in use of inventory ........................................... 456 6. Change in inventory method................................................ 457 7. Bases of valuation................................................................. 457 8. Recording of inventories ....................................................... 457 9. Valuation of particular goods ............................................... 457 10. Prohibited methods............................................................... 458 11. Inventories at cost price ....................................................... 459 12. Inventories at market price/cost .......................................... 460 13. Inventories of dealers in securities ...................................... 460 14. Inventories of farmers .......................................................... 461 15. Inventories of miners and manufacturers........................... 461 16. Inventories of retail merchants............................................ 461
C. Indirect Methods of Determining Income
1. Definition of tax evasion ....................................................... 462 2. Definition of tax avoidance ................................................... 463 3. Distinctions between tax evasion and tax avoidance ......... 463 4. Methods of reconstructing taxpayer’s income ................... 463 5. Benchmarking ...................................................................... 464 6. Percentage method ............................................................... 464 7. Net worth method explained................................................ 465 8. Legality of net worth method ............................................... 468 9. Cash expenditures method .................................................. 468 10. Bank deposit method ............................................................ 469 11. Unit and value method ......................................................... 470 12. Third party information access to records method ........................................................................ 471 13. Other methods of determining unreported income .......................................................................... 471
B. Payment of Tax
1. Manual payment .................................................................. 506 2. Place of payment of tax ........................................................ 508 3. Rules in the case of large taxpayers .................................... 509 4. Date of payment of tax ......................................................... 511 5. Late payment of tax under meritorious circumstances .............................................................. 512 6. Exceptions as regards date of payment ............................... 513 7. Termination of taxable period.............................................. 514 8. Where tax not otherwise collectible from owner of income........................................................... 514 9. Deductions from income tax shown in return ..................... 515 10. Payment of tax in installments where there are deductions ............................................................. 515
D. Accounting Periods
xviii
1. Definition of accounting period ............................................ 471 2. Kinds of accounting period ................................................... 471 3. General rule and exceptions................................................. 471 4. Definition of taxable year ..................................................... 472 5. Length of taxable year.......................................................... 472 6. Taxpayers under calendar year ........................................... 473 7. Taxpayers under the fiscal year basis ................................. 473 8. Returns for less than twelve (12) months period ................ 473 9. Period in which items of gross income included.................. 474 10. Period for which deductions and credits taken ................... 473 11. Change of accounting period ................................................ 473
C. Withholding of Income Taxes
E. Tax Accounting Among Controlled Taxpayers
1. Concept of a withholding tax................................................ 517 2. Primary reasons for the withholding tax system................ 517 3. Kinds of withholding of income taxes .................................. 517 4. Kinds of withholding tax at source ...................................... 518 5. Requisites for withholding tax ............................................. 519 6. Cases when final withholding tax at source required ........ 519 7. Cases when creditable withholding tax required ............... 521 8. Persons required to deduct and withhold creditable withholding tax .......................................................... 522 9. Obligation imposed upon buyer-payor of income .............. 522 10. Exemption of seller-payee of income ................................... 523 11. Time of withholding.............................................................. 523 12. Liability of withholding agent.............................................. 524 13. Exemption from withholding ............................................... 525 14. Returns and payments of taxes withheld at source............ 527 15. Statement to be given to recipient of payment ................... 527 16. Annual information return................................................... 528
1. Definition of terms ................................................................ 475 2. Allocation of income and deductions.................................... 476 3. Purpose and scope of the law ............................................... 476 4. Determination of true net income of controlled taxpayer ....................................................................... 477 5. Transfer pricing guidelines ................................................. 477 Chapter XIV. — Filing of Returns and Payment of Tax A. Income Tax Returns 1. Definition of income tax return ............................................ 479 2. Classes of income tax returns .............................................. 479 3. General requirements of income tax returns ...................... 479 4. Sufficiency of a return .......................................................... 480 5. Individuals required to file income tax returns .................. 480 6. Individuals not required to file income tax returns ............ 480
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