Percentage-of-completion/capitalized-cost method.

(e) Percentage-of-completion/capitalized-cost method. Under the PCCM, a taxpayer must determine the income from a long-term contract using the PCM for the applicable percentage of the contract and its exempt contract method, as defined in paragraph (c) of this section, for the remaining percentage of the contract. For residential construction contracts described in 1.460-3(c), the applicable percentage is 70 percent, and the remaining percentage is 30 percent. For qualified ship contracts described in 1.460-2(d), the applicable percentage is 40 percent, and the remaining percentage is 60 percent.


26 CFR § 1.460-4

Scoping language

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