H.R. 2759: Fair Accounting for Condominium Construction Act
This bill, titled the Fair Accounting for Condominium Construction Act
, proposes changes to how certain types of residential construction contracts are accounted for under the Internal Revenue Code. Here are the key points of the bill:
Purpose of the Bill
The primary aim of the bill is to provide an exception to the existing accounting method known as the percentage of completion method
for specific residential construction contracts. This method is typically used by builders to report income based on the progress of a project rather than recognizing the entire income once the project is completed.
Changes to the Internal Revenue Code
- Clause Modification: The bill seeks to amend Section 460 of the Internal Revenue Code. It changes the terminology from
home construction contract
toresidential construction contract
. - Adjustments to Timeframes: For residential construction contracts that do not fit the description of
home construction contracts
, a longer timeframe of up to three years will be allowed for accounting purposes instead of the current two-year limitation. - Alternative Minimum Tax Application: The amendments will also affect how these contracts are treated under the alternative minimum tax by updating relevant references in the law.
- Implementation Date: The changes would apply to contracts that are entered into after the bill becomes law.
Implications
The updated accounting rules could impact the financial reporting and tax liabilities of builders and developers involved in residential construction. By allowing a longer computation period for income recognition, the changes may influence cash flow and tax strategies for those in the construction industry.
Relevant Companies
- KBH - KB Home, a major homebuilder, would likely be affected as this bill may change how it recognizes income from its residential projects.
- DHI - D.R. Horton, Inc., known for residential construction, may adjust its accounting practices based on the provisions of this bill.
- PHM - PulteGroup, Inc. might also see changes in its accounting for residential construction contracts due to the extended timeframe allowed for revenue recognition.
This is an AI-generated summary of the bill text. There may be mistakes.
Sponsors
1 sponsor
Actions
2 actions
Date | Action |
---|---|
Apr. 09, 2025 | Introduced in House |
Apr. 09, 2025 | Referred to the House Committee on Ways and Means. |
Corporate Lobbying
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