contracting

In a recent case, Shea Homes, Inc., 142 TC No# 3, the tax court decided against the IRS' position that Shea Homes should have recognized revenues on each individual home sold using the completed contract method.  In a far-reaching decision for master-planned community builders, the tax court agreed with Shea Homes that they should be allowed to defer revenue recognition until the completion of the ENTIRE community, including land improvements and community amenities. New home builders are allowed to recognize revenue on the completed contract method - capitalizing expenses until at least 95% of the total contract costs are incurred [...]