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.

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

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

Designed For

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

Prerequisites

Previous construction industry experience

Preparation

None

Notice

By registering for this program and, accordingly, receiving the eMaterials, you’re acknowledging that you understand both the copyright restrictions on your eMaterials and the CTCPA cancellation policy.

Fees

Credits

Level

Code

Vendor

Fields of Study

Leader(s):

Arthur Auerbach, Surgent McCoy CPE, LLC

Leader Bios

Arthur Auerbach, Surgent McCoy CPE, LLC

Arthur Auerbach, CPA, CGMA is an independent tax consultant located in Atlanta, Georgia, specializing in tax consulting and estate and financial planning for individuals and closely held businesses. He is affiliated with the Asbury Law Firm as a consultant. He is a member of the Georgia, Virginia, New York, and Greater Washington CPA societies. Art was appointed to the AICPA Tax Executive Committee for a three-year term beginning February 1, 2018, and ending May 31, 2021. Beginning in May 2021, Art was appointed to be a member of the AICPA Tax Practice and Procedure Committee. He is an active member of the Georgia Society of CPAs and serves on the Georgia Department of Revenue Commissioners Advisory Group, the Financial Literacy Task Force, and Leadership Council, in addition to chairing the GSCPA Federal State Tax Task Force. He is also a member of the Virginia Society’s Tax Committee. He has served as an advisor to the District of Columbia Office of Tax and Revenue and the Tax Commissioners Advisory group in Virginia. Art is a nationally recognized speaker on a variety of tax topics offered for continuing education for CPAs and financial planners. He has authored several publications and articles. Art is licensed in Georgia, Virginia, District of Columbia, and New York, and he is a life member of the American Institute of CPAs.

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