contract year
(6) Election to have look-back method not apply in de minimis cases (A) Amounts taken into account after completion of contract Paragraph (1)(B) shall not apply with respect to any taxable year (beginning after the taxable year in which the contract is completed) if— (i) the cumulative taxable income (or loss) under the contract as of the close of such taxable year, is within (ii) 10 percent of the cumulative look-back taxable income (or loss) under the contract as of the close of the most recent taxable year to which paragraph (1)(B) applied (or would have applied but for subparagraph (B)). (B) De minimis discrepancies Paragraph (1)(B) shall not apply in any case to which it would otherwise apply if— (i) the cumulative taxable income (or loss) under the contract as of the close of each prior contract year, is within (ii) 10 percent of the cumulative look-back income (or loss) under the contract as of the close of such prior contract year. (C) Definitions For purposes of this paragraph— (i) Contract year The term “contract year” means any taxable year for which income is taken into account under the contract. (ii) Look-back income or loss The look-back income (or loss) is the amount which would be the taxable income (or loss) under the contract if the allocation method set forth in paragraph (2)(A) were used in determining taxable income. (iii) Discounting not applicable The amounts taken into account after the completion of the contract shall be determined without regard to any discounting under the 2nd sentence of paragraph (2). (D) Contracts to which paragraph applies This paragraph shall only apply if the taxpayer makes an election under this subparagraph. Unless revoked with the consent of the Secretary, such an election shall apply to all long-term contracts completed during the taxable year for which election is made or during any subsequent taxable year.