Be prepared for the tax season

Tax man

In this article, we’ll cover the several tools available to construction contractors to defer income tax liabilities. There are significant differences between financial POC and tax POC (and the related exemptions) that can result in large tax deferrals. One of the significant differences between financial POC and tax POC is the capitalization of indirect costs.

Those who understand and take advantage of deferral opportunities can push a substantial amount of income tax to future tax years. In the alternative, if the wrong method is selected, it could result in paying too much too soon. A contract is considered long-term if the contract’s term spans over more than one tax year.

Cash method can be an overall method of accounting for all revenue and expenses. Under this method, revenue is recognized when cash is received and expenses are deducted when paid. Expenses are deducted when the all-events test has occurred but not before economic performance has occurred. Revenue and costs incurred on a contract are not recognized until the contract is complete and accepted. This method may be elected by contractors whose contracts are exempt from POC under Code section 460 (using the cost-to-cost method).

Contracts that are exempt from POC under IRC Section 460 give the contractor an opportunity to defer income taxes by using a more favorable accounting method.

Get a Free Website along with a Marketing Automation that works.

Automated Marketing Solution
Social Media Marketing & SEO

START NOW

Comments

No Money to Start? No Problem. Try These 5 Options to Fund Your Business.

Ready For Anything Opinions expressed by Entrepreneur contributors are their own. You might be limited to a strict budget to start a business, but that doesn’t mean you don’t have any options. It is possible to start a business with very little money, if you have the right combination of skills, work ethic and marketing know-how. According to Chris Guillebeau, author of The $100 Startup , “To succeed in a business project, especially one you’re excited about, it helps to think carefully about all the skills you have that could be helpful to others and particularly about the combination of those skills.” Related: How to Start a Business With (Almost) No Money Follow these simple guidelines to fund your business when you have little to no money. No Money to Start? No Problem. Try These 5 Options to Fund Your Business. Yes, making something does take an initial cost in supplies, but often, these products can be sold...

The Morning After: 'Sonic the Hedgehog' got rescheduled

Employees and partners are already testing its streaming capabilities. Every Xbox One title will be playable on Project xCloud When Project xCloud debuts, it'll be capable of streaming any of the system's games (including backward compatible ones) out of the gate without developers needing to make any changes. Microsoft also says when a developer updates an Xbox One game, those changes will automatically apply to Project xCloud versions. However, changes to the developer's kit let a game know when it's being played from the cloud to adjust for different types of displays or run multiplayer games on a single server. The teeth, the legs, the teeth, the eyes, the teeth. 'Sonic the Hedgehog' movie delayed to fix nightmare-inducing design Following a statement by director Jeff Fowler that changes are "going to happen," Paramount pushed back the release date three months to give the filmmakers "a little more time to make Sonic just right." No...

The Large Magellanic Cloud comes alive in a 240 megapixel image

Ciel Austral is a team of five very enthusiastic amateur French astronomers, Jean Claude Canonne, Philippe Bernhard, Didier Chaplain, Nicolas Outters, and Laurent Bourgon, who own and operate their own telescope in northern Chile. The 14400×14200 image was stitched together from nearly 4,000 separate images that required 1,060 hours (6.3 weeks) of exposures shot from July 2017 to January 2019. It took two computers eight days to stitch together the photos, and a further two months to process the 620 gigabytes of data. If you could warp yourself to the Magellanic Cloud, it wouldn't look like the dreamy, painterly image pictured above. Much of the image is made up of false colors that show the different elements present in the image. Different colors represent hydrogen, sulfur and oxygen III, emphasizing the cloud-like high-density gas nebulae in a way that a standard visible light image can't. The image shows the birth and death of stars and the aftermath, including super...

ProsConnected.com

Search This Blog