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. This industry is subject to many elections and considerations 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 recent legislation on construction taxation, including changes to net operating losses and the AMT rules. This is a critical presentation tailored for CPAs who work for or represent construction contractors.

Prerequisites

Previous construction industry experience

Objectives

• Recognize the impact of recent tax legislation on the construction industry
• Identify when the cash method of accounting may be used for long-term contracts
• Reference sections of the Internal Revenue Code (IRC) that impact the construction industry
• Recognize how the IRC impacts specialized sectors of the construction industry, such as homebuilders and residential construction
• Explain how a contractor qualifies for the small contractor exemption and its advantages
• Recognize the different methods of income recognition from long-term contracts available when a 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 alternative minimum tax impacts the construction industry and identify ways to reduce its impact
• Understand the issues involved with the look-back provisions
• Recall 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 impacts the construction industry
• Identify the most commonly missed tax strategies for contractors

Highlights

• The impact of recent legislation on the construction industry
• How to qualify for the small contractor exemption and its advantages for the taxpayer
• Options available to small contractors 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
• Look-back rules
• Using the 10 percent method to allow certain contractors to defer recognizing taxable income
• Critical tax planning strategies for contractors