Source: https://www.washingtontaxlaw.com/Washington-Tax-Alerts/Washington-Tax-Alert-August-4-2008.shtml
Timestamp: 2019-04-25 00:04:34+00:00

Document:
Treasury and the Service issued proposed regulations on Friday that will make several important changes to the tax accounting rules for long-term contracts. See proposed regulations (REG-120844-07). The proposed changes to the regulations will be effective for taxable years beginning on or after the date the regulations are finalized. A public hearing on the proposed regulations has been scheduled for December 5, 2008.
The proposed regulations expand the definition of home construction contracts, which can be accounted for using the completed contract method or the accrual method rather than the percentage of completion method. Under the proposed regulations, contracts entered into by land developers could be treated as home construction contracts even if the contract does not involve the construction of any dwelling unit. In addition, the proposed regulations would treat individual condominium units as a separate building for purposes of determining whether the underlying contract qualifies as a home construction contract.
The proposed regulations also would change the rules for making accounting method changes under IRC § 460. Currently, taxpayer-initiated changes in methods of accounting under IRC § 460 are permitted only on a cut-off basis, i.e. , without an IRC § 481 adjustment. See Treas. Reg. § 1.460-4(g). The proposed regulations would permit many accounting method changes under IRC § 460 to be made with an IRC § 481 adjustment.

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