For a taxpayer who is required to use the percentage of completion method, the taxpayer can elect to defer the recognition of income and the related costs until the taxable year in which cumulative contract costs are at least 10 percent of the estimated contract costs.

Question

Quizplus · Accepted Answer

This is true, and is referred to as the "10% exception" under the percentage of completion method. The taxpayer can defer recognition of income and related costs until the year in which cumulative costs reach 10% of the estimated total contract costs.

For a Taxpayer Who Is Required to Use the Percentage