BIR Ruling [DA-505-99]

September 3, 1999 BIR RULING [DA-505-99] HPCO Agridev Corporation Washington cor. Figueroa Sts. Silay City, Negros Occidental Attention: Ms . Bi Yong S . Chungunco Corporate Secretary Gentlemen : This refers to your letter dated March 15, 1999 requesting for an authority to change your accounting period from calendar year ending December 31 to fiscal year ending September 30. Documents submitted disclosed that you open your books of accounts every January 1 and you close it every December 31 during the past three (3) years; that you intend to change your accounting period from calendar year basis to fiscal year basis to coincide your taxable and financial year with the sugar milling season; and that such change will better reflect your income and expenses in your preparation of tax returns and financial statements. In reply, please be informed that your request is hereby granted, provide, you comply with the provisions of Sections 46 and 47 of the Tax Code of 1997 which states: "SEC. 46. Change of Accounting Period . If a taxpayer, other than an individual, changes his accounting period from fiscal year to calendar year, from calendar year to fiscal year, or from one fiscal year to another, the net income shall, with the approval of the Commissioner, be computed on the basis of such new accounting period, subject to the provisions of Section 47. "SEC. 47. Final or Adjustment Returns for a Period of Less than Twelve (12) Months . "(A) Returns for Short Period Resulting from Change of Accounting Period . If a taxpayer, other than an individual, with the approval of the Commissioner, changes the basis of computing net income from fiscal year to calendar year, a separate final or adjustment return shall be made for the period between the close of the last fiscal year for which return was made and the following December 31. If the change is from calendar year to fiscal year, a separate final or adjustment return shall be made for the period between the close of the last calendar year for which return was made and the date designated as the close of the fiscal year. If the change is from one fiscal year to another fiscal year, a separate final or adjustment return shall be made for the period between the close of the former fiscal year and the date designated as the close of the new fiscal year. "(B) Income Computed on Basis of Short Period . Where a separate final or adjustment return is made under Subsection (A) on account of a change in the accounting period, and in all other cases where a separate final or adjustment return is required or permitted by rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, to be made for a fractional part of a year, then the income shall be computed on the basis of the period for which separate final or adjustment return is made." Accordingly, HPCO Agridev Corporation should file a separate final or adjustment return for the period corresponding to January 1 and September 30, 1998 which is the period between the close of the calendar year for which a return was made and the date designated as the close of the fiscal year. This will serve as your authority to change your accounting period from calendar year to fiscal year upon your compliance with the requirement of filing a short period return. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)