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Percentage of Completion Method of Accounting

A tax accounting method where businesses recognize income and expenses from a long-term contract as work progresses, based on the percentage of the project completed, rather than waiting until the entire project is finished.

Internal Revenue Code of 1986

The main body of tax law in the United States, which governs federal taxation.

Home Construction Contract

Under existing tax law, typically a contract for the construction of four or fewer dwelling units and any improvements common to those units. These contracts often have special accounting exceptions.

Residential Construction Contract

A broader term encompassing contracts for the construction of any dwelling units, including multi-unit buildings like condominiums or apartment complexes. This bill expands the tax definition to include these larger projects under certain exceptions.

Alternative Minimum Tax (AMT)

A separate tax calculation designed to ensure that wealthy individuals and corporations pay at least a minimum amount of tax, regardless of deductions or credits they might otherwise claim.

Tax Deferral

Postponing the payment of taxes to a future date. This does not eliminate the tax obligation, but shifts when it is due, which can be beneficial for cash flow.