Title II — TAX ON INCOME
income shall be computed on the basis of the period for which separate
final or adjustment return is made.
SEC. 48. Accounting for Long-term Contracts. — Income from long-term
contracts shall be reported for tax purposes in the manner as provided in
this Section. As used herein, the term ‘long-term contracts’ means building,
installation or construction contracts covering a period in excess of one (1) year.
Persons whose gross income is derived in whole or in part from such contracts
shall report such income upon the basis of percentage of completion. The
return should be accompanied by a return certificate of architects or engineers
showing the percentage of completion during the taxable year of the entire work
performed under contract. There should be deducted from such gross income all
expenditures made during the taxable year on account of the contract, account
being taken of the material and supplies on hand at the beginning and end of the
taxable period for use in connection with the work under the contract but not
yet so applied. If upon completion of a contract, it is found that the taxable net
income arising thereunder has not been clearly reflected for any year or years,
the Commissioner may permit or require an amended return.
SEC. 49. Installment Basis. —
(A)
Sales of Dealers in Personal Property. — Under rules and regulations
prescribed by the Secretary of Finance, upon recommendation of the
Commissioner, a person who regularly sells or otherwise disposes of
personal property on the installment plan may return as income therefrom
in any taxable year that proportion of the installment payments actually
received in that year, which the gross profit realized or to be realized
when payment is completed, bears to the total contract price.
(B)
Sales of Realty and Casual Sales of Personalty. — In the case (1) of a
casual sale or other casual disposition of personal property (other than
property of a kind which would properly be included in the inventory
of the taxpayer if on hand at the close of the taxable year), for a price
exceeding One thousand pesos (P1,000), or (2) of a sale or other
disposition of real property, if in either case the initial payments do not
exceed twenty-five percent (25%) of the selling price, the income may,
under rules and regulations prescribed by the Secretary of Finance, upon
recommendation of the Commissioner, be returned on the basis and in the
manner above prescribed in this Section. As used in this Section, the term
‘initial payments’ means the payments received in cash or property other
than evidences of indebtedness of the purchaser during the taxable period
in which the sale or other disposition is made.
National Internal Revenue Code of 1997 (as amended by the TRAIN Law, RAs 11256, 11346 and 11467)
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