Surgent's Critical Issues Involving Taxation of Construction Contractors

Overview

Many consider taxation of construction contractors to be the most complex area of the Internal Revenue Code. Probably no other industry has so many elections and considerations that need to be considered and made in order to reduce or defer amounts owed. In this course, we will highlight these areas and discuss potential opportunities for practitioners and their clients. We will also discuss the impact of more recent legislation on construction taxation, including changes to net operating losses and the AMT rules. This is a critical presentation “tailor-made” for CPAs who either work for or represent construction contractors.

Highlights

• The impact of recent legislation on the construction industry
• How to qualify for the “small contractor exemption” and its advantages to the taxpayer
• Options available to the “small” contractor regarding taxation of long-term contracts
• How the choice of entity impacts taxation of contractors
• How AMT impacts the construction industry
• IRC §460 and “large” contractors
• How “uninstalled materials” impact taxation of contractors
• How the “look-back” rules impact contractors
• How the “10 percent method” can allow certain contractors to defer recognizing taxable income
• Critical tax planning strategies for contractors

Prerequisites

Previous construction industry experience

Designed For

CPAs who either work for or represent construction contractors who are looking for ways to reduce taxable income

Objectives

• Recognize the impact recent tax legislation has had on the construction industry
• Identify when the cash method of accounting may be used for long-term contracts
• Recall the authoritative source of the Internal Revenue Code (IRC) impacting the construction industry in general and long-term contracts in particular
• Recognize how the IRC impacts specialized sectors of the construction industry, such as homebuilders and residential construction
• State how a contractor qualifies for the small contractor exemption and the advantages it presents the contractor
• Recognize the different methods of income recognition from long-term contracts available when the contractor qualifies for the small contractor exemption
• Identify the qualifications for the 10 percent deferral election
• Identify the major differences regarding cost capitalization rules between U.S. GAAP, exempt contracts, and nonexempt contracts
• Recognize the five basic rules concerning cost allocation for tax purposes
• Recognize how the alternative minimum tax impacts the construction industry
• Identify ways to reduce the impact of the alternative minimum tax
• Recognize the issues involved with the “look-back” provisions
• Recognize the issues involved in determining a worker’s status as an employee or independent contractor and how this determination impacts the construction industry
• Recognize the key provisions of “FIN 48” and how it specifically impacts the construction industry
• Identify the most commonly missed tax strategies for contractors

Preparation

None