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Requirements of percentage of completion methodExcept as provided in paragraph (3), in the case of any...

Requirements of percentage of completion methodExcept as provided in paragraph (3), in the case of any long-term contract with respect to which the percentage of completion method is used

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Answer #1

In the case of any long-term contract, the taxable income from such contract shall be determined under the percentage of completion method

Requirements of percentage of completion methodExcept as provided in paragraph (3), in the case of any long-term contract with respect to which the percentage of completion method is used—

(A) the percentage of completion shall be determined by comparing costs allocated to the contractunder subsection (c) and incurred before the close of the taxable year with the estimated total contract costs, and

(B) upon completion of the contract (or, with respect to any amount properly taken into account after completion of the contract, when such amount is so properly taken into account), the taxpayer shall pay (or shall be entitled to receive) interest computed under the look-back method of paragraph (2).

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