Source: http://taxtv.com/code/00393-USCODE-2011-title26-subtitleA-chap1-subchapE-partII-subpartB-sec460/
Timestamp: 2017-03-25 19:36:23
Document Index: 737376659

Matched Legal Cases: ['§460', '§460', '§460', '§804', '§10203', '§1008', '§5041', '§7621', '§11812', '§1702', '§1211', '§2023', '§1211', '§1704', '§1702', '§7621', '§7811', '§7621', '§7621', '§7621', '§7811', '§7811', '§7621', '§7621', '§7621', '§7621', '§7621', '§7621', '§7815', '§7815', '§5041', '§5041', '§5041', '§1008', '§1008', '§1008', '§1008', '§1008', '§1008', '§5041', '§2023', '§7815', '§1008', '§708', '§403', '§460']

IRC §460. Special rules for long-term contracts - TaxTV.com
IRC §460. Special rules for long-term contracts
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Except as provided in paragraph (3), in the case of any long-term contract with respect to which the percentage of completion method is used—
The interest computed under the look-back method of this paragraph shall be determined by—
(A) first 1 allocating income under the contract among taxable years before the year in which the contract is completed on the basis of the actual contract price and costs instead of the estimated contract price and costs,
Paragraph (1)(B) shall not apply to any contract—
(i) the gross price of which (as of the completion of the contract) does not exceed the lesser of—
In the case of a pass-thru entity—
(ii) in determining overpayments and underpayments for purposes of applying paragraph (2)(B)—
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.
Paragraph (1)(B) shall not apply with respect to any taxable year (beginning after the taxable year in which the contract is completed) if—
Paragraph (1)(B) shall not apply in any case to which it would otherwise apply if—
For purposes of subparagraph (A), the term “interest accrual period” means the period—
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 4 and the regulations thereunder.
In applying section 263A(f) for purposes of subparagraph (A), the production period shall be the period—
This subsection shall not apply to any—
For purposes of paragraph (4), the term “independent research and development expenses” means any expenses incurred in the performance of research or development, except that such term shall not include—
For purposes of this paragraph, the term “qualified property” means property described in section 168(k)(2) which—
(ii) 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)).
The term “Federal long-term contract” means any long-term contract—
Subsections (a), (b), and (c)(1) and (2) shall not apply to—
(2) Determination of taxpayer’s gross receipts
For purposes of paragraph (1), the gross receipts of—
(A) all trades or businesses (whether or not incorporated) which are under common control with the taxpayer (within the meaning of section 52(b)),
(B) all members of any controlled group of corporations of which the taxpayer is a member, and
(C) any predecessor of the taxpayer or a person described in subparagraph (A) or (B),
(3) Controlled group of corporations
For purposes of this subsection, the term “controlled group of corporations” has the meaning given to such term by section 1563(a), except that—
(A) “more than 50 percent” shall be substituted for “at least 80 percent” each place it appears in section 1563(a)(1), and
(4) Construction contract
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.
(5) Special rule for residential construction contracts which are not home construction contracts
In the case of any residential construction contract which is not a home construction contract, subsection (a) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1989) shall apply except that such subsection shall be applied—
(A) by substituting “70 percent” for “90 percent” each place it appears, and
(B) by substituting “30 percent” for “10 percent”.
(6) Definitions relating to residential construction contracts
The term “home construction contract” means any construction contract if 80 percent or more of the estimated total contract costs (as of the close of the taxable year in which the contract was entered into) are reasonably expected to be attributable to activities referred to in paragraph (4) with respect to—
The term “residential construction contract” means any contract which would be described in subparagraph (A) if clause (i) of such subparagraph reads as follows:
“(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.
A contract for the manufacture of property shall not be treated as a long-term contract unless such contract involves the manufacture of—
For purposes of this subsection, under regulations prescribed by the Secretary—
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.
(Added Pub. L. 99– 4, title VIII, §804(a), Oct. 22, 1986, 100 Stat. 2358; amended Pub. L. 100–203, title X, §10203(a), Dec. 22, 1987, 101 Stat. 1330–394; Pub. L. 100–647, title I, §1008(c)(1), (2), (4), title V, §5041(a)–(b)(3), (c), (d), Nov. 10, 1988, 102 Stat. 3438, 3439, 3673, 3674; Pub. L. 101–239, title VII, §§7621(a)–(c), 7811(e), 7815(e)(1), Dec. 19, 1989, 103 Stat. 2375, 2376, 2408, 2419; Pub. L. 101–508, title XI, §11812(b)(8), Nov. 5, 1990, 104 Stat. 1388–535; Pub. L. 104–188, title I, §§1702(h)(15), 1704(t)(28), Aug. 20, 1996, 110 Stat. 1874, 1888; Pub. L. 105–34, title XII, §1211(a), (b), Aug. 5, 1997, 111 Stat. 998, 999; Pub. L. 111–240, title II, §2023(a), Sept. 27, 2010, 124 Stat. 2559.)
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”.
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)”.
1989—Subsec. (a). Pub. L. 101–239, §7621(a), substituted “Requirement that percentage of completion method be used” for “Percentage of completion-capitalized cost method” in heading and amended text generally. Prior to amendment, text read as follows:
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)(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”.
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)(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. (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. (e)(1). Pub. L. 100–647, §5041(b)(1), amended par. (1) generally. Prior to amendment, par. (1) read as follows: “Subsections (a), (b), and (c)(1) and (2) shall not apply to any construction contract entered into by a taxpayer—
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).
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.”
Section 1211(c) of Pub. L. 105–34 provided that:
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– 4, see section 11812(c) of Pub. L. 101–508, set out as a note under section 42 of this title.
Section 7621(d) of Pub. L. 101–239 provided that:
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– 4, 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.
Section 5041(e) of Pub. L. 100–647, as amended by Pub. L. 101–239, title VII, §7815(e)(3), Dec. 19, 1989, 103 Stat. 2419, provided that:
“(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– 4]; 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.”
Section 10203(b) of Pub. L. 100–203 provided that:
Section 804(d) of Pub. L. 99– 4, as amended by Pub. L. 100–647, title I, §1008(c)(3), Nov. 10, 1988, 102 Stat. 3439, provided that:
Section 804(b) of Pub. L. 99– 4 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)).”
Pub. L. 108–357, title VII, §708, Oct. 22, 2004, 118 Stat. 1550, as amended by Pub. L. 109–135, title IV, §403(s), Dec. 21, 2005, 119 Stat. 2628, provided that:
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