AGC Comments on Proposed IRS Regulations on Accounting for Home Construction Contracts

On November 3 AGC submitted comments to the IRS in response to proposed regulations providing guidance to taxpayers in the home construction industry.  Specifically, the proposed regulations provide guidance on two issues: accounting for long-term construction contracts that qualify as home construction contracts under §460 of the Internal Revenue Code; and changes in method of accounting for long-term contracts under  §460.   Generally, §460 requires taxpayers to use the percentage-of-completion method (PCM) to account for taxable income from any long-term contract, but there is an exception from this general rule for home construction contracts.  Taxpayers that qualify for the home construction contract exemption can use methods such as the completed contract method.  The proposed regulations are intended to expand the scope of the home construction contract exemption.  To view a copy of AGC’s letter, click here.