By Ben Kinsey, CPA
Calling all small contractors!
I have good news for
contractors concerning long term construction contracts. The 2017 Tax Act can save you money and
reduce your accounting hassles. As long as your business does less than $25
million in gross receipts and the contract duration is over a year in length,
you will be able to use cash accounting as opposed to the percentage of
completion method you are currently forced to embrace. In the past, long term construction contracts
had to be reported using the percentage of completion method. This method was very cumbersome to employ,
since it required the contractor to even out the reporting of income over the
life of the contract, regardless of the income collected. To use this method, all
contractors were required to keep detailed accounting records of each period
during the contract.
