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Timestamp: 2019-04-19 07:10:10+00:00

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In the case of any long-term contract, the taxable income from such contract shall be determined under the percentage of completion method (as modified by subsection (b)).
(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).
In the case of any long-term contract with respect to which the percentage of completion method is used, except for purposes of applying the look-back method of paragraph (2), any income under the contract (to the extent not previously includible in gross income) shall be included in gross income for the taxable year following the taxable year in which the contract was completed. For purposes of subtitle F (other than sections 6654 and 6655), any interest required to be paid by the taxpayer under subparagraph (B) shall be treated as an increase in the tax imposed by this chapter for the taxable year in which the contract is completed (or, in the case of interest payable with respect to any amount properly taken into account after completion of the contract, for the taxable year in which the amount is so properly taken into account).
(C) then using the adjusted overpayment rate (as defined in paragraph (7)), compounded daily, on the overpayment or underpayment determined under subparagraph (B).
For purposes of the preceding sentence, any amount properly taken into account after completion of the contract shall be taken into account by discounting (using the Federal mid-term rate determined under section 1274(d) as of the time such amount was properly taken into account) such amount to its value as of the completion of the contract. The taxpayer may elect with respect to any contract to have the preceding sentence not apply to such contract.
In the case of any long-term contract, the Secretary may prescribe a simplified procedure for allocation of costs to such contract in lieu of the method of allocation under subsection (c).
(ii) which is completed within 2 years of the contract commencement date.
For purposes of this subparagraph, rules similar to the rules of subsections (e)(2) and (f)(3) shall apply.
(iii) any interest required to be paid by the taxpayer under paragraph (2) shall be paid by such entity (and any interest entitled to be received by the taxpayer under paragraph (2) shall be paid to such entity).
This paragraph shall not apply to any closely held pass-thru entity.
This paragraph shall not apply to any contract unless substantially all of the income from such contract is from sources in the United States.
(II) if at all times during the year involved more than 50 percent of the interests in the entity are held by individuals directly or through 1 or more other pass-thru entities, the highest rate of tax specified in section 1.
The term "closely held pass-thru entity" means any pass-thru entity if, at any time during any taxable year for which there is income under the contract, 50 percent or more (by value) of the beneficial interests in such entity are held (directly or indirectly) by or for 5 or fewer persons. For purposes of the preceding sentence, rules similar to the constructive ownership rules of section 1563(e) shall apply.
In the case of any long-term contract with respect to which an election under this paragraph is in effect, the 10-percent method shall apply in determining the taxable income from such contract.
The 10-percent method is the percentage of completion method, modified so that any item which would otherwise be taken into account in computing taxable income with respect to a contract for any taxable year before the 10-percent year is taken into account in the 10-percent year.
The term "10-percent year" means the 1st taxable year as of the close of which at least 10 percent of the estimated total contract costs have been incurred.
An election under this paragraph shall apply to all long-term contracts of the taxpayer which are entered into during the taxable year in which the election is made or any subsequent taxable year.
This paragraph shall not apply to any taxpayer which uses a simplified procedure for allocation of costs under paragraph (3)(A).
The 10-percent method shall be taken into account for purposes of applying the look-back method of paragraph (2) to any taxpayer making an election under this paragraph.
(ii) 10 percent of the cumulative look-back taxable income (or loss) under the contract as of the close of the most recent taxable year to which paragraph (1)(B) applied (or would have applied but for subparagraph (B)).
(ii) 10 percent of the cumulative look-back income (or loss) under the contract as of the close of such prior contract year.
The term "contract year" means any taxable year for which income is taken into account under the contract.
The look-back income (or loss) is the amount which would be the taxable income (or loss) under the contract if the allocation method set forth in paragraph (2)(A) were used in determining taxable income.
The amounts taken into account after the completion of the contract shall be determined without regard to any discounting under the 2nd sentence of paragraph (2).
This paragraph shall only apply if the taxpayer makes an election under this subparagraph. Unless revoked with the consent of the Secretary, such an election shall apply to all long-term contracts completed during the taxable year for which election is made or during any subsequent taxable year.
The adjusted overpayment rate for any interest accrual period is the overpayment rate in effect under section 6621 for the calendar quarter in which such interest accrual period begins.
(ii) ending on the return due date for the following taxable year.
For purposes of the preceding sentence, the term "return due date" means the date prescribed for filing the return of the tax imposed by this chapter (determined without regard to extensions).
In the case of a long-term contract, all costs (including research and experimental costs) which directly benefit, or are incurred by reason of, the long-term contract activities of the taxpayer shall be allocated to such contract in the same manner as costs are allocated to extended period long-term contracts under section 451 and the regulations thereunder.
In the case of a cost-plus long-term contract or a Federal long-term contract, any cost not allocated to such contract under paragraph (1) shall be allocated to such contract if such cost is identified by the taxpayer (or a related person), pursuant to the contract or Federal, State, or local law or regulation, as being attributable to such contract.
Except as provided in subparagraphs (B) and (C), in the case of a long-term contract, interest costs shall be allocated to the contract in the same manner as interest costs are allocated to property produced by the taxpayer under section 263A(f).
(ii) ending on the contract completion date.
In applying section 263A(f) for purposes of subparagraph (A), paragraph (1)(B)(iii) of such section shall be applied on a contract-by-contract basis; except that, in the case of a taxpayer described in subparagraph (B)(i)(II) of this paragraph, paragraph (1)(B)(iii) of section 263A(f) shall be applied on a property-by-property basis.
(C) marketing, selling, and advertising expenses.
(B) any expenses under an agreement to perform research or development.
Solely for purposes of determining the percentage of completion under subsection (b)(1)(A), the cost of qualified property shall be taken into account as a cost allocated to the contract as if subsection (k) of section 168 had not been enacted.
(ii) is placed in service before January 1, 2027 (January 1, 2028 in the case of property described in section 168(k)(2)(B)).
(B) which is a subcontract under a contract described in subparagraph (A).
For purposes of paragraph (1), the rules of section 168(h)(2)(D) (relating to certain taxable entities not treated as instrumentalities) shall apply.
(ii) who meets the gross receipts test of section 448(c) for the taxable year in which such contract is entered into.
In the case of a home construction contract with respect to which the requirements of clauses (i) and (ii) of subparagraph (B) are not met, section 263A shall apply notwithstanding subsection (c)(4) thereof.
(A) Application of gross receipts test to individuals, etc.
For purposes of paragraph (1)(B)(ii), in the case of any taxpayer which is not a corporation or a partnership, the gross receipts test of section 448(c) shall be applied in the same manner as if each trade or business of such taxpayer were a corporation or partnership.
Any change in method of accounting made pursuant to paragraph (1)(B)(ii) shall be treated as initiated by the taxpayer and made with the consent of the Secretary. Such change shall be effected on a cut-off basis for all similarly classified contracts entered into on or after the year of change.
For purposes of this subsection, the term "construction contract" means any contract for the building, construction, reconstruction, or rehabilitation of, or the installation of any integral component to, or improvements of, real property.
(B) by substituting "30 percent" for "10 percent".
(ii) improvements to real property directly related to such dwelling units and located on the site of such dwelling units.
For purposes of clause (i), each townhouse or rowhouse shall be treated as a separate building.
"(i) dwelling units (as defined in section 168(e)(2)(A)(ii)), and".
The term "long-term contract" means any contract for the manufacture, building, installation, or construction of property if such contract is not completed within the taxable year in which such contract is entered into.
(B) any item which normally requires more than 12 calendar months to complete (without regard to the period of the contract).
(B) a contract which is properly treated as an aggregation of separate contracts may be so treated.
For purposes of this section, the term "contract commencement date" means, with respect to any contract, the first date on which any costs (other than bidding expenses or expenses incurred in connection with negotiating the contract) allocable to such contract are incurred.
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including regulations to prevent the use of related parties, pass-thru entities, intermediaries, options, or other similar arrangements to avoid the application of this section.
The date of the enactment of the Revenue Reconciliation Act of 1989, referred to in subsec. (e)(4), is the date of enactment of title VII of Pub. L. 101–239, which was approved Dec. 19, 1989.
2018-Subsec. (b)(2)(A). Pub. L. 115–141 inserted comma after "first".
2017-Subsec. (c)(6)(B)(ii). Pub. L. 115–97, §13201(b)(2)(A), substituted "January 1, 2027 (January 1, 2028" for "January 1, 2020 (January 1, 2021".
Subsec. (e)(1)(B). Pub. L. 115–97, §13102(d)(1)(A), in introductory provisions, inserted "(other than a tax shelter prohibited from using the cash receipts and disbursements method of accounting under section 448(a)(3))" after "taxpayer".
Subsec. (e)(1)(B)(ii). Pub. L. 115–97, §13102(d)(1)(B), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: "whose average annual gross receipts for the 3 taxable years preceding the taxable year in which such contract is entered into do not exceed $10,000,000."
Subsec. (e)(2). Pub. L. 115–97, §13102(d)(2), added par. (2) and struck out former par. (2) which related to determination of taxpayer's gross receipts.
Subsec. (e)(3) to (6). Pub. L. 115–97, §13102(d)(2), redesignated pars. (4) to (6) as (3) to (5), respectively, and struck out former par. (3) which related to controlled group of corporations.
2015-Subsec. (c)(6)(B)(ii). Pub. L. 114–113, §143(b)(6)(I), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: "is placed in service after December 31, 2009, and before January 1, 2011 (January 1, 2012, in the case of property described in section 168(k)(2)(B)), or after December 31, 2012, and before January 1, 2016 (January 1, 2017, in the case of property described in section 168(k)(2)(B))."
Subsec. (c)(6)(B)(ii). Pub. L. 114–113, §143(a)(2), substituted "January 1, 2016 (January 1, 2017" for "January 1, 2015 (January 1, 2016".
2014-Subsec. (c)(6)(B)(ii). Pub. L. 113–295 substituted "January 1, 2015 (January 1, 2016" for "January 1, 2014 (January 1, 2015".
2013-Subsec. (c)(6)(B)(ii). Pub. L. 112–240 inserted ", or after December 31, 2012, and before January 1, 2014 (January 1, 2015, in the case of property described in section 168(k)(2)(B))" before period at end.
2010-Subsec. (c)(6). Pub. L. 111–240 added par. (6).
1997-Subsec. (b)(2)(C). Pub. L. 105–34, §1211(b)(1), substituted "the adjusted overpayment rate (as defined in paragraph (7))" for "the overpayment rate established by section 6621".
Subsec. (b)(6). Pub. L. 105–34, §1211(a), added par. (6).
Subsec. (b)(7). Pub. L. 105–34, §1211(b)(2), added par. (7).
1996-Subsec. (b)(1). Pub. L. 104–188, §1704(t)(28), which directed that par. (1) be amended by substituting "the look-back method of paragraph (2)" for "the look-back method of paragraph (3)", could not be executed, because that phrase does not appear in text. See 1989 Amendment note below.
Subsec. (e)(6)(B). Pub. L. 104–188, §1702(h)(15), substituted "section 168(e)(2)(A)(ii)" for "section 167(k)".
1990-Subsec. (e)(6)(A)(i). Pub. L. 101–508 substituted "section 168(e)(2)(A)(ii)" for "section 167(k)".
"(B) 10 percent of the items with respect to such contract shall be taken into account under the taxpayer's normal method of accounting.
"(2) 90 percent look-back method to apply.-Upon completion of any long-term 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 determined by applying the look-back method of subsection (b)(3) to 90 percent of the items with respect to the contract."
Subsec. (a)(2). Pub. L. 101–239, §7811(e)(1), inserted "(or, with respect to any amount properly taken into account after completion of the contract, when such amount is so properly taken into account)" after "any long-term contract".
Subsec. (b)(1). Pub. L. 101–239, §7621(c)(2)(A), substituted "paragraph (3)" for "paragraph (4)".
Pub. L. 101–239, §7621(c)(2)(B), which directed the amendment of par. (1) by substituting "paragraph (2)" for "paragraph (3)", was executed by making the substitution in subpar. (B) and concluding provisions to reflect the probable intent of Congress.
Pub. L. 101–239, §7621(c)(1), redesignated par. (2) as (1) and struck out former par. (1) which read as follows: "Subsection (a) not to apply where percentage of completion method used.-Subsection (a) shall not apply to any long-term contract with respect to which amounts includible in gross income are determined under the percentage of completion method."
Subsec. (b)(2). Pub. L. 101–239, §7621(c)(1), redesignated par. (3) as (2). Former par. (2) redesignated (1).
Pub. L. 101–239, §7811(e)(4), (6), inserted two sentences at end.
Subsec. (b)(2)(B). Pub. L. 101–239, §7811(e)(2), substituted "any amount properly taken into account" for "any amount received or accrued" and "is so properly taken into account" for "is so received or accrued".
Subsec. (b)(3). Pub. L. 101–239, §7621(c)(1), redesignated par. (4) as (3). Former par. (3) redesignated (2).
Pub. L. 101–239, §7811(e)(3), in concluding provisions, substituted "any amount properly taken into account" for "any amount received or accrued" and "such amount was properly taken into account" for "such amount was received or accrued".
Subsec. (b)(3)(B). Pub. L. 101–239, §7621(c)(3), substituted "Paragraph (1)(B)" for "Paragraph (2)(B) and subsection (a)(2)" in introductory provisions.
Subsec. (b)(4). Pub. L. 101–239, §7621(c)(1), redesignated par. (5) as (4). Former par. (4) redesignated (3).
Subsec. (b)(4)(A)(i). Pub. L. 101–239, §7621(c)(4)(A), substituted "paragraph (2)" for "paragraph (3)".
Subsec. (b)(4)(A)(ii). Pub. L. 101–239, §7621(c)(4)(B), substituted "paragraph (2)(B)" for "paragraph (3)(B)" in introductory provisions.
Subsec. (b)(4)(A)(ii)(I). Pub. L. 101–239, §7621(c)(4)(C), substituted "paragraph (2)(A)" for "paragraph (3)(A)".
Subsec. (b)(4)(A)(iii). Pub. L. 101–239, §7621(c)(4)(A), substituted "paragraph (2)" for "paragraph (3)" in two places.
Subsec. (b)(5). Pub. L. 101–239, §7621(b), added par. (5).
Pub. L. 101–239, §7621(c)(1), redesignated former par. (5) as (4).
Subsec. (e)(2)(C). Pub. L. 101–239, §7811(e)(5), added subpar. (C).
Subsec. (e)(5). Pub. L. 101–239, §7621(c)(5), inserted introductory provisions and struck out former introductory provisions which read as follows: "In the case of any residential construction contract which is not a home construction contract, subsection (a) shall be applied-".
Subsec. (e)(6)(A). Pub. L. 101–239, §7815(e)(1)(A), substituted "activities referred to in paragraph (4) with respect to" for "the building, construction, reconstruction, or rehabilitation of".
Subsec. (e)(6)(A)(i). Pub. L. 101–239, §7815(e)(1)(B), added cl. (i) and struck out former cl. (i) which read as follows: "dwelling units contained in buildings containing 4 or fewer dwelling units, and".
1988-Subsec. (a)(1)(A). Pub. L. 100–647, §5041(a)(1), substituted "90" for "70".
Subsec. (a)(1)(B). Pub. L. 100–647, §5041(a)(2), substituted "10" for "30".
Subsec. (a)(2). Pub. L. 100–647, §5041(a)(1), substituted "90" for "70" in heading and in text.
Subsec. (b)(2). Pub. L. 100–647, §1008(c)(2)(B), substituted "Except as provided in paragraph (4), in" for "In".
Subsec. (b)(2)(B). Pub. L. 100–647, §1008(c)(4)(B), inserted "(or, with respect to any amount received or accrued after completion of the contract, when such amount is so received or accrued)" after "contract".
Subsec. (b)(3). Pub. L. 100–647, §1008(c)(4)(A), inserted at end "For purposes of the preceding sentence, any amount received or accrued after completion of the contract shall be taken into account by discounting (using the Federal mid-term rate determined under section 1274(d) as of the time such amount was received or accrued) such amount to its value as of the completion of the contract. The taxpayer may elect with respect to any contract to have the preceding sentence not apply to such contract."
Pub. L. 100–647, §1008(c)(1)(A), substituted "paragraph" for "subparagraph".
Subsec. (b)(3)(B). Pub. L. 100–647, §1008(c)(1)(B), substituted "subparagraph (A)" for "paragraph (1)" in two places.
Subsec. (b)(3)(C). Pub. L. 100–647, §1008(c)(1)(C), substituted "subparagraph (B)" for "paragraph (1)".
Subsec. (b)(4). Pub. L. 100–647, §1008(c)(2)(A), added par. (4).
Subsec. (b)(5). Pub. L. 100–647, §5041(d), added par. (5).
"(B) whose average annual gross receipts for the 3 taxable years preceding the taxable year in which such contract is entered into do not exceed $10,000,000."
Subsec. (e)(5). Pub. L. 100–647, §5041(b)(2), added par. (5).
Subsec. (e)(6). Pub. L. 100–647, §5041(b)(3), added par. (6).
Subsec. (h). Pub. L. 100–647, §5041(c), added subsec. (h).
1987-Subsec. (a). Pub. L. 100–203 substituted "70 percent" for "40 percent" in par. (1)(A) and in heading and text of par. (2), and "30 percent" for "60 percent" in par. (1)(B).
Amendment by section 13102(d) of Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, with provision for exemption from percentage completion for long-term contracts, see section 13102(e) of Pub. L. 115–97, set out as a note under section 263A of this title.
Amendment by section 13201 of Pub. L. 115–97 applicable to property acquired and placed in service after Sept. 27, 2017, and specified plants planted or grafted after Sept. 27, 2017, see section 13201(h) of Pub. L. 115–97, set out as a note under section 168 of this title.
Amendment by section 143(a)(2) of Pub. L. 114–113 applicable to property placed in service after Dec. 31, 2014, in taxable years ending after such date, see section 143(a)(5) of Pub. L. 114–113, set out as a note under section 168 of this title.
Amendment by section 143(b)(6)(I) of Pub. L. 114–113 applicable to property placed in service after Dec. 31, 2015, in taxable years ending after such date, see section 143(b)(7) of Pub. L. 114–113, set out as a note under section 168 of this title.
Amendment by Pub. L. 113–295 applicable to property placed in service after Dec. 31, 2013, in taxable years ending after such date, see section 125(e) of Pub. L. 113–295, set out as a note under section 168 of this title.
Amendment by Pub. L. 112–240 applicable to property placed in service after Dec. 31, 2012, in taxable years ending after such date, see section 331(f) of Pub. L. 112–240, set out as a note under section 168 of this title.
Pub. L. 111–240, title II, §2023(b), Sept. 27, 2010, 124 Stat. 2559 , provided that: "The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2009."
"(1) In general.-Except as provided in paragraph (2), the amendments made by this section [amending this section] shall apply to contracts completed in taxable years ending after the date of the enactment of this Act [Aug. 5, 1997].
"(2) Subsection (b).-The amendments made by subsection (b) [amending this section] shall apply for purposes of section 167(g) of the Internal Revenue Code of 1986 to property placed in service after September 13, 1995."
Amendment by section 1702(h)(15) of Pub. L. 104–188 effective, except as otherwise expressly provided, as if included in the provision of the Revenue Reconciliation Act of 1990, Pub. L. 101–508, title XI, to which such amendment relates, see section 1702(i) of Pub. L. 104–188, set out as a note under section 38 of this title.
Amendment by Pub. L. 101–508 applicable to property placed in service after Nov. 5, 1990, but not applicable to any property to which section 168 of this title does not apply by reason of subsec. (f)(5) of section 168, and not applicable to rehabilitation expenditures described in section 252(f)(5) of Pub. L. 99–514, see section 11812(c) of Pub. L. 101–508, set out as a note under section 42 of this title.
"(1) In general.-Except as provided in paragraph (2), the amendments made by this section [amending this section] shall apply to contracts entered into on or after July 11, 1989.
"(2) Binding bids.-The amendments made by this section shall not apply to any contract resulting from the acceptance of a bid made before July 11, 1989. The preceding sentence shall apply only if the bid could not have been revoked or altered at any time on or after July 11, 1989.
"(3) Special rule for certain ship contracts.-The amendments made by this section shall not apply in the case of a qualified ship contract (as defined in section 10203(b)(2)(B) of the Revenue Act of 1987 [Pub. L. 100–203, set out below])."
Amendment by sections 7811(e) and 7815(e)(1) of Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title.
Amendment by section 1008(c)(1), (2), (4) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
"(A) In general.-Except as otherwise provided in this paragraph, the amendments made by subsections (a), (b), and (c) [amending this section and section 56 of this title] shall apply to contracts entered into on or after June 21, 1988.
"(B) Binding bids.-The amendments made by subsections (a), (b), and (c) shall not apply to any contract resulting from the acceptance of a bid made before June 21, 1988. The preceding sentence shall apply only if the bid could not have been revoked or altered at any time on or after June 21, 1988.
"(C) Special rule for certain ship contracts.-The amendments made by subsections (a) and (b) [amending this section and section 56 of this title] shall not apply in the case of a qualified ship contract (as defined in section 10203(b)(2)(B) of the Revenue Act of 1987 [Pub. L. 100–203, set out below]).
"(2) Subsection (d).-The amendment made by subsection (d) [amending this section] shall apply as if included in the amendments made by section 804 of the Reform Act [Pub. L. 99–514]; except that such amendment shall not apply to any contract completed in a taxable year ending before the date of the enactment of this Act [Nov. 10, 1988], if the due date (determined with regard to extensions) for the return for such year is before such date of enactment."
"(1) In general.-Except as provided in paragraph (2), the amendments made by this section [amending this section] shall apply to contracts entered into after October 13, 1987.
"(A) In general.-The amendments made by this section shall not apply in the case of a qualified ship contract.
"(ii) the taxpayer reasonably expects to complete such contract within 5 years of the contract commencement date (as defined in section 460(g) of the Internal Revenue Code of 1986)."
"(1) In general.-The amendments made by this section [enacting this section] shall apply to any contract entered into after February 28, 1986.
"(ii) any independent research and development expenses shall not be treated as amounts chargeable to capital account.
"(B) Independent research and development expenses.-For purposes of subparagraph (A), the term 'independent research and development expenses' has the meaning given to such term by section 460(c)(5) of the Internal Revenue Code of 1986, as added by this section."
Pub. L. 99–514, title VIII, §804(b), Oct. 22, 1986, 100 Stat. 2361 , provided that: "The Secretary of the Treasury or his delegate shall modify the income tax regulations relating to accounting for long-term contracts to carry out the provisions of section 460 of the Internal Revenue Code of 1986 (as added by subsection (a))."
"(a) In General.-In the case of a qualified naval ship contract, the taxable income of such contract during the 5-taxable year period beginning with the taxable year in which the construction commencement date occurs shall be determined under a method identical to the method used in the case of a qualified ship contract (as defined in section 10203(b)(2)(B) of the Revenue Act of 1987 [Pub. L. 100–203, set out as an Effective Date of 1987 Amendment note above]).
"(2) the amount of tax so imposed during such period.
"(1) In general.-The term 'qualified naval ship contract' means any contract or portion thereof that is for the construction in the United States of 1 ship or submarine for the Federal Government if the taxpayer reasonably expects the acceptance date will occur no later than 9 years after the construction commencement date.
"(2) Acceptance date.-The term 'acceptance date' means the date 1 year after the date on which the Federal Government issues a letter of acceptance or other similar document for the ship or submarine.
"(3) Construction commencement date.-The term 'construction commencement date' means the date on which the physical fabrication of any section or component of the ship or submarine begins in the taxpayer's shipyard.
"(d) Certain Adjustments Not to Apply.-Section 481 of the Internal Revenue Code of 1986 shall not apply with respect to any change in the method of accounting which is required by this section.
"(e) Effective Date.-This section shall apply to contracts for ships or submarines with respect to which the construction commencement date occurs after the date of the enactment of this Act [Oct. 22, 2004]."
Allocable costs (within the meaning of subsec. (c) of this section) with respect to any property to include contributions paid to or under a pension or annuity plan whether or not such contributions represent past service costs, see section 10204 of Pub. L. 100–203, set out as a note under section 263A of this title.

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