Fall 2009 issue of Horizons

and tax liability. The law could drive joint ventures out of themarket, leaving large federal construction jobs with very few, if any, bidders.

Look-Back Interest Provisions

The AGC also is supporting several changes regarding look-back interest. These changes include:

• Allowing closely held pass-through entities (i.e., S Corps) to apply the look-back interest provisions at the entity level. This change would eliminate the current provision of requiring each stockholder to report the look-back interest on his or her personal return. • Currently, there is an exemption from the look- back rules for contracts that are completed within two years and for which the contract price does not exceed the lesser of $1,000,000 or 1 percent of the average gross receipts of the taxpayer for the three preceding years. The AGC is supporting a legislative change to remove the $1,000,000 or 1 percent threshold. This proposed change would exempt a significant percentage of the contracts currently subject to the look-back provisions. • Establish more clear guidance when the statute of limitations begins for look-back interest claims. Part of the complexity to look-back interest is caused by the fact that the limitations period for taxpayer claims for look-back interest is separate from the taxpayer’s normal statute of limitations and that such limitations period is based on the completion date of the contract giving rise to look- back interest. The U. S. Financial Accounting Standards Board and the International Accounting Standards Board have a long-standing joint project on revenue recognition with the intended purpose of clarifying the principles for recognizing revenue. In December 2008, a discussion paper was issued by the boards inviting comments on their preliminary view of establishing a single, contract- Revenue Recognition Project

29 u fall 2009 issue