Discussion:Construction accounting

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Discussion Forum Index --> Basic Tax Questions --> Construction accounting
Discussion Forum Index --> Tax Questions --> Construction accounting

Bobkim (talk|edits) said:

27 May 2008

I have 2 construction accounting situations. I have a client who is an S-corporation who files a cash basis tax return. The sales for 2005 - 2007 averaged just over 10 million per year. Do I have to file accrual basis for the 2008 tax return. I thought I had seen something years ago that said S-corporations were not subject to the 10 million dollar sales limit. Also are the sales based on accrual basis sales or cash basis sales.

I have a C-corp client that will average over 5 million in sales within the next 2 years. The do not have inventory. Are they required to file accrual basis tax return when they reach the 5 million average limit or since they do not have inventory are they able to wait until they reach the 10 million average limit. Thank you.

TheTinCook (talk\|edits) said:	27 May 2008
Construction taxpayers have some special issues. Check out this IRS article about construction accounting.

Bobkim (talk\|edits) said:	27 May 2008
Thanks. I had checked that site and did not find a definate answer. It did not say anything about S-corps. I do remember looking into this years ago and seeing that S-corps were not subjsct. I don't know if the law changed or I was looking at something different. It does seem like the C-corp would have to start using the accrual method when they reach the 5 million average.