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I own a Construction LLC and wish to file my tax returns on

Customer Question
a completed contract basis....
I own a Construction LLC and wish to file my tax returns on a completed contract basis. Am I able to do this?
Submitted: 7 years ago.Category: Tax
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Answered in 24 minutes by:
12/1/2010
Tax Professional: Robin D., Senior Tax Advisor 4 replied 7 years ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,264
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello and thank you for using Just Answer.

Completed Contract Method may only be used by small contractors and any home construction contracts. The fact that you are an LLC does not factor into the choice.

The disadvantages of the completed contract method are:

  • The books and records do not show clear information on operations
  • Income can be bunched into a year when a lot of jobs are completed, and
  • Losses on contracts are not deductible until the contracts are completed

If your annual gross receipts for the last 3 years were $10 million or less then you are a small contractor. Large contractors are required to account for long-term contracts using the percentage-of-completion method (PCM) for their general construction contracts.

 

I hope this information is helpful,

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,264
Experience: 15years with H & R Block. Divisional leader, Instructor
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