Exception to Percentage of Completion Method of Accounting for Certain Residential Construction Contracts
Section 70430 · Sec. 70430 ·
What this chapter is about
This part widens an accounting exception from home building to residential building. A contract that is not for homes gets a three year test instead of two. The same swap is made for the minimum tax. The change reaches contracts signed in tax years after this law passed.
“by striking "home construction contract" both places it appears and inserting "residential construction contract", and”
The section amends section 460(e) of the Internal Revenue Code of 1986 by replacing home construction contract with residential construction contract in both places in paragraph (1), and by inserting words applying a three-year rather than a two-year test in subparagraph (B)(i) for a residential construction contract that is not a home construction contract. It also strikes paragraph (4), renumbers paragraph (5) as (4), and fixes the cross reference that follows.
What the document actually says
“by striking "home construction contract" both places it appears and inserting "residential construction contract", and”
That sentence, in plain words
The word home is taken out in two places. The word residential is put in. The rest of the phrase stays the same.
What this is about
The new term is wider than the old one. A contract that is not for homes gets a three year test. The old test ran over two years.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
“Section 56(a)(3) is amended by striking "any home construction contract (as defined in section 460(e)(6))" and inserting "any residential construction contract (as defined in section 460(e)(4))".”
The section replaces the reference to a home construction contract defined in section 460(e)(6) with a reference to a residential construction contract defined in section 460(e)(4) in section 56(a)(3) of the Internal Revenue Code of 1986.
What the document actually says
“Section 56(a)(3) is amended by striking "any home construction contract (as defined in section 460(e)(6))" and inserting "any residential construction contract (as defined in section 460(e)(4))".”
That sentence, in plain words
A phrase is taken out of the minimum tax rule. The new term is put in its place.
What this is about
The pointer also moves to a new spot. It follows the renumbering made above. Both rules now use the same term.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall apply”Who acts: Secretary of the TreasuryHow: statuteSec. 70430 in the PDF
What the document says
“The amendments made by this section shall apply to contracts entered into in taxable years beginning after the date of the enactment of this Act.”
The section applies its amendments to contracts entered into in taxable years beginning after the date of enactment.
What the document actually says
“The amendments made by this section shall apply to contracts entered into in taxable years beginning after the date of the enactment of this Act.”
That sentence, in plain words
The changes reach deals signed in tax years after this law passed. Older deals are left out.
What this is about
The old rules still hold for them. The date is the day this law passed. It turns on when the deal was signed.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
Provide for reconciliation pursuant to title II of H. Con. Res. 14, Public Law 119-21, sec. 70430, 139 Stat. 239 (2025). https://www.govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm
This page
“Exception to Percentage of Completion Method of Accounting for Certain Residential Construction Contracts,” Provide for reconciliation pursuant to title II of H. Con. Res. 14, section 70430. Read the Mandate, https://readthemandate.org/pl-119-21/section-70430/ (retrieved August 26, 2026).
Cite the document when the claim is about what the document says. Cite this page when the indexing, the wording or the record of what has happened is what is being relied on.
What This Page Covers, and What It Leaves Out
Each distinct thing the section does: swap home construction contract for residential construction contract and add the three year test, make the matching change for the alternative minimum tax, and fix the effective date.
The striking and renumbering of paragraphs and the cross reference change that follows, which move existing text without changing what it requires.
The section works by amending sections 56(a)(3) and 460(e) of the Internal Revenue Code of 1986, which are not indexed here, so what the exception does cannot be checked against anything on this site.
