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Construction Tax and Reporting Issues: Contract Modifications, Accounting Methods, and PPP Loan Forgiveness

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, October 28, 2020

Recorded event now available

This course will prepare tax professionals and advisers working with large and small construction contractors. The panel will explain book and tax accounting methods for contractors considering the proposed regulations released July 2020, strategies for reporting expenses paid with PPP loan proceeds without specific guidance, as well as how to handle contract modifications and the IRS initiative targeting contractors.

Description

The current state of the economy has wreaked havoc on businesses. Many construction businesses applied for and received PPP loans. Although the loans were welcome, how to apply for and handle the forgiveness remains unclear. Decisions need to be made about the deductibility of the expenses relative to these loans before additional guidance is issued.

The 2017 tax reform provided some relief by raising the threshold for using the completed contract method (CCM) or cash method for small contractors from $10 million to $26 million (indexed for inflation). Proposed regulations issued July 2020 offer guidance on qualification for this relief. Although the percentage complete method provides a more realistic approach to reporting of income, it is substantially more complicated than other bookkeeping methods. Ensuring that your client's business qualifies for more favorable tax accounting methods is more critical than ever.

Listen as our panel of experts discusses the non-deductibility of expenses relative to loan forgiveness, GAAP and tax reporting differences, additional financial statement disclosures and reporting considerations in light of current economy. They will also discuss the top planning ideas for 2020-2021 to make sure your construction business client is maximizing depreciation and job cost deductions.

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Outline

  1. Accounting considerations for construction contractors
    1. Percentage complete vs. completed contract method
    2. ASC 606 tax considerations
    3. Contract modifications
  2. Tax considerations for construction contractors
    1. Small contractor methods: cash and CCM
    2. Syncing tax and book under ASC 606
    3. Avoiding or preparing for the IRS
    4. Depreciation after tax reform
    5. Maximizing other deductions after tax reform
    6. Top Planning Ideas for 2020
  3. Contractor issues in the current economy
    1. CARES ACT Relief
    2. PPP Loan Forgiveness
    3. Financial statement considerations

Benefits

The panel will address these and other relevant matters:

  • Method considerations under the proposed regulations issued July 2020
  • Properly handling contract modifications for book and tax methods
  • PPP loan forgiveness and reporting PPP related expenses
  • CARES Act impact on contractors
  • Maximizing depreciation deductions after tax reform
  • Update on ASC 606 for revenue recognition

Faculty

Ferri-Carlo
Carlo R. Ferri
Director, Tax Strategies
Kreischer Miller

Mr. Ferri has extensive experience providing tax and business advisory services for privately-held companies in various...  |  Read More

Guillaume, Mark
Mark A. Guillaume, CPA, CCIFP
Director, Audit & Accounting
Kreischer Miller

Mr. Guillaume provides business advisory, audit, and accounting services to clients in a variety of industries,...  |  Read More