S. 1687 — Fair Accounting for Condominium Construction Act

This section revises the exception to the percentage-of-completion method of accounting under Section 460(e) of the Internal Revenue Code by (1) replacing "home construction contract" with "residential construction contract" throughout, (2) allowing a 3-year (from 2-year) completion period for residential construction contracts that do not qualify as home construction contracts, and (3) striking paragraph (4), redesignating paragraph (5) as paragraph (4), and updating a cross-reference therein. (As background, the percentage-of-completion method requires taxpayers with long-term contracts to recognize income proportionally as work progresses; the exception permits deferral of income recognition until contract completion for qualifying smaller residential contracts.) The section makes a conforming amendment to the alternative minimum tax exception in Section 56(a)(3). The changes apply to contracts entered into after the date of enactment.