The U.S. Internal Revenue Service can reallocate revenues and expenses between parent corporations and their subsidiaries to more clearly reflect a proper allocation of income. In such instances it is the responsibility of the corporation to prove that the IRS has been arbitrary in its decision-making, thus establishing a "guilty until proved innocent" tax approach.

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The statement is true. The IRS has the authority to reallocate revenues and expenses between parent corporations and their subsidiaries, and it is the responsibility of the corporation to prove the IRS's decision-making was arbitrary. This is called a transfer pricing method, and it can result in a "guilty until proved innocent" approach to taxes.

The US Internal Revenue Service Can Reallocate Revenues and Expenses Between