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Bye-Low, Inc a contrator with $21 million of gross receipts, uses the completed contract method of...

Bye-Low, Inc a contrator with $21 million of gross receipts, uses the completed contract method of accounting for income from office construction contracts for regular tax purposes. One contract began in 2017, was completed in 2018, and earned 1.6 million. At the end of 2017, 45% of the work on the contract had been completed. Calculate Bye-Low's income from the contract for regular tax and AMT purposes, as well as teh required AMT adjustements, if any.

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Answer #1

IN COMPLETED CONTRACT METHOD REVENUE IS RECOGNISED ON COMPLETION OF CONTRACT.SO THERE IS NO CONCEPT OF PERCENTAGE OR PART COMPLETION IN COMPLETED CONTRACT METHOD.

CALCULATION

SINCE 1.6 MILLION HAS BEEN EARNED FOR COMPLETED CONTRACT IT WILL BE INCLUDED IN BYE'S INCOME AND ALSO 45% OF 21 MILLION=9.45 MILLION BUT OUT OF IT 1.6 MILLION HAS ALREADY BEEN INCLUDED THEREFORE REMAINING 9.45-1.16=8.29 MILLION WILL ALSO BE INCLUDED IN THE BYE'S INCOME FROM CONTRACT.

REGARDING AMT CERATIN ADJUSTMENTS WILL BE MADE TO THE GROSS INCOME.

BUT SINCE IN THE QUESTION THERE IS NO DATA REGARDING ADJUSTMENTS AND DEDUCTIONS AND ADDITIONS THEN IT WILL NOT BE POSSIBLE TO SHOW THE CALCULATION.

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