Discussion:Building contractor getting paid as house is built?

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Revision as of 13:56, 14 March 2008
Scottycoyote (Talk | contribs)
(ok wait, then wh)
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Vickytown (Talk | contribs)
(If you are a "sm)
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Right now im showing the income as they make it.}} Right now im showing the income as they make it.}}
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 +{{ForumReplyPost|UserID=Vickytown|Date=14 March 2008|Text=If you are a "small" residential contractor (under $10 million), then you can use several methods for reporting taxable income and expenses including the completed contract method. There is an IRS brochure called "Accounting for Construction Contracts - Constructon Tax Tips" which is very helpful. I think if you do a search on the IRS web site for "construction contracts" it should come up.}}

Revision as of 14:04, 14 March 2008

Discussion Forum Index --> Basic Tax Questions --> Building contractor getting paid as house is built?
Discussion Forum Index --> Tax Questions --> Building contractor getting paid as house is built?

Scottycoyote (talk|edits) said:

13 March 2008
normally i captialize all the costs and put them into cost basis then show them as expense in the year the house is sold.

Got a contractor thats building custom houses to order now, and basically they get reimbursed for all their costs and make 6 to 10% over that as a contractor fee. Im thinking in this situation youd have to show the income and expense as you go now, if i wait until the house is closed on and it goes into the next year there are some timing issues im guessing the irs wouldnt agree with?

Scottycoyote (talk|edits) said:

13 March 2008
nevermind

percentage of completion accounting

RoyDaleOne (talk|edits) said:

14 March 2008
Why?

Solomon (talk|edits) said:

14 March 2008
"nevermind

percentage of completion accounting "

See Sec. 460(e).

RoyDaleOne (talk|edits) said:

14 March 2008
Did not give sales revenue level!!!

Scottycoyote (talk|edits) said:

14 March 2008
ive looked and looked, i didnt see where revenue level came into play, can you elaborate please?

Szptax (talk|edits) said:

14 March 2008
constuction rev > 5 mill requires % of completion method

Scottycoyote (talk|edits) said:

14 March 2008
kewl thanks

revenue was about 600k so they are on the hook

RoyDaleOne (talk|edits) said:

14 March 2008
600K is way short of 5mil what is up here?

Vickytown (talk|edits) said:

14 March 2008
I thought revenue had to be $10 million before the percentage of completion requirement.

Scottycoyote (talk|edits) said:

14 March 2008
my bad, too many late nights.........thought that read revenue less than 5 mil requires the method. Must...drink....more....coffee

Scottycoyote (talk|edits) said:

14 March 2008
ok wait, then what method am i supposed to be using? If i do it the normal way with contractors....include all costs and income in the year of sale, the timing is off because my client is getting paid portions as they go.

Right now im showing the income as they make it.

Vickytown (talk|edits) said:

14 March 2008
If you are a "small" residential contractor (under $10 million), then you can use several methods for reporting taxable income and expenses including the completed contract method. There is an IRS brochure called "Accounting for Construction Contracts - Constructon Tax Tips" which is very helpful. I think if you do a search on the IRS web site for "construction contracts" it should come up.
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