In using the percentage of completion method, annual income to be reported from a contract is determined in part by comparing actual costs incurred to total estimated costs.If total actual costs are less than that which were originally estimated, the taxpayer is required to pay the IRS interest.

Question

Quizplus · Accepted Answer

When actual costs are less than estimated costs, the taxpayer has overstated income and must pay interest to the IRS.

In Using the Percentage of Completion Method, Annual Income to Be