Practice question
A corporation negotiates a genuine sale directly to Buyer Z. To hide part of the corporation’s gain, its controller inserts a nominal intermediary who bears no real commercial role. Prearranged documents show two same-day sales, although the parties know the corporation is the true seller to Z. The structure is deliberately used to mislead the BIR and pay less than the lawful tax. Following Estate of Toda, what is the strongest conclusion?
- The sham intermediary and deceptive structure support tax evasion
- Two deeds conclusively prove lawful avoidance
- Any payment by the intermediary immunizes the corporation
- The controller’s preferred label binds the BIR
- Every resale, genuine or sham, is automatically exempt
Legal references
- CIR v. Estate of Toda, G.R. 147188, September 14, 2004: https://lawphil.net/judjuris/juri2004/sep2004/gr_147188_2004.html
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