On January 11, 2001, the IRS issued the long-awaited final regulations to Internal Revenue Code Section 460, the code section governing construction contracts. We constantly study the Internal Revenue Code to be aware of changes and how they affect our clients. Our goal is for our clients to pay the lowest tax required!

The construction industry is currently under scrutiny by the Internal Revenue Service. The Service has instituted a "market segment specialization program," which includes the construction industry. The agents are now being trained in audit techniques for construction contracts. They now have an Audit Technique Guide to assist them. We have copies of these manuals, and we are experienced at representation before the Internal Revenue Service.

Under the very complex Internal Revenue Code Sections 451 and 460, there can be as many as seven different acceptable methods of reporting contract income as follows:

We can help you choose among the many methods of taxation available for contractors to ensure that you pay the lowest required tax. By proper planning, a contractor can often minimize the burden that income taxes impose. Many contractors find out at I.R.S. audits that they are not in compliance with the rules and regulations.

We can assist you in other tax matters as well.  Do you understand the rules on capitalization of repairs and maintenance versus expensing? Are you familiar with the rules on capital versus operating leases? Should you operate as a "C" or an "S" type corporation, or should you operate as an "LLC"?  What are the advantages of each? Are you familiar with ESOPS, family limited partnerships, and when they are appropriate? Are you affected by the alternative minimum tax system?  Are you subject to the look-back rules?  We can assist you in answering the above questions.

Lastly, we can assist in minimizing the tax impact when you decide to sell the business, or otherwise retire.

Please contact us to discuss any of the above.