In the first two articles in Aronson’s Tax Compliance Series for Construction Contractors, we explored the various methods of accounting available, as well as the lookback provision. This article will focus on the Long-Term Contract Adjustment (LTCA).
LTCA comes into play with our dear old friend, the Alternative Minimum Tax (AMT). The LTCA is an adjustment that must be computed on contracts that do not use the percentage of completion method of accounting. You must compute the gross profit earned on these contracts as if you were using the percentage of completion method and then compare it to …read more
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