Taxation of the Construction Contractor

Overview

The taxation of construction contractors has become increasingly complex under the Tax Cuts and Jobs Act (TCJA) and the One Big Beautiful Bill Act (OBBBA) of 2025, which have permanently reshaped the rules for depreciation, Section 179 expensing, interest limitations, qualified business income deductions, and long-term contract accounting. This course provides a practical guide to navigating these rules, covering percentage-of-completion, completed contract, income recognition, cost allocation, lookback requirements, and key exemptions for small and home construction contracts. With real-world examples, case studies, and planning strategies, you’ll learn how to achieve favorable tax outcomes while staying fully compliant with IRS regulations.

Highlights

• Walkthrough of accounting methods and relevant elections under IRC 460
• Illustrative examples and analysis
• Review of pertinent cases and revenue rulings
• Update of other IRS activity, including recent Tax Reform

Prerequisites

Basic understanding of the tax accounting methods for long-term contracts.

Objectives

• Understand and apply the accounting methods for long-term construction contracts under IRC Section 460, including percentage-of-completion, completed contract, exemptions, and lookback requirements.
• Evaluate the impact of recent tax reforms, including the TCJA and OBBBA of 2025, on depreciation, expensing, interest limitations, qualified business income, and other contractor-specific provisions.
• Identify key compliance requirements, common pitfalls, and
• book vs. tax — differences to develop effective planning strategies that achieve favorable tax outcomes while meeting IRS standards.