IRS - Switch from % Completed to Completed Contract

[Jdub1234]

Digging into a situation and trying to find out all of the details. A construction company wants to switch from % completion over to completed contract method, and I was wondering what are the steps to do that? Do they have to contact the IRS? Any special thing they have to do?

Just trying to learn if this is possible.

 

[Just Blue]

Digging into a situation and trying to find out all of the details. A construction company wants to switch from % completion over to completed contract method, and I was wondering what are the steps to do that? Do they have to contact the IRS? Any special thing they have to do?

Just trying to learn if this is possible.

Who are you in this? Are you one of the owners in the company?

 

[Jdub1234]

Who are you in this? Are you one of the owners in the company?

I am not. I was brought this situation from my boss and was asked to look into it and see what I could find.

 

[LdiJ]

I have not dealt with that particular issue since grad school, but here is a link to a lawyer's website that gives some good information:

https://www.baldwincpas.com/content/understanding-percentage-completion-and-completed-contracts
It does appear that percentage of completion must be used unless specific facts apply.

 

[davew9128]

Are they required to use POC? That should be the first question you ask.

 

[Taxing Matters]

I have not dealt with that particular issue since grad school, but here is a link to a lawyer's website that gives some good information:

It is a CPA website, not a law firm website.

https://www.baldwincpas.com/content/understanding-percentage-completion-and-completed-contracts
It does appear that percentage of completion must be used unless specific facts apply.

Note that the linked article discusses a standard of the Financial Accounting Standards Board (FASB), not anything in the tax law or IRS published guidance. So unless the OP is a public company or otherwise required to adopt FASB standards, that particular rule will not apply to the OP.