Common use of Completion of Contract Clause in Contracts

Completion of Contract. Any item of income properly taken into account during the recognition period under the completed contract method (as de- scribed in § 1.460–4(d)) where the cor- poration began performance of the con- tract before the beginning of the rec- ognition period is recognized built-in gain if the item would have been in- cluded in gross income before the be- ginning of the recognition period under the percentage of completion method (as described in § 1.460–4(b)). Any simi- lar item of deduction is recognized built-in loss if the item would have been allowed as a deduction against gross income before the beginning of the recognition period under the per- centage of completion method.

Completion of Contract. Any item of income properly taken into account during the recognition period under the completed contract method (as de- scribed in § 1.460–4(d1.451–3(d)) where the cor- poration began performance of the con- tract before the beginning of the rec- ognition period is recognized built-in gain if the item would have been in- cluded in gross income before the be- ginning of the recognition period under the percentage of completion method (as described in § 1.460–4(b1.451–3(c)). Any simi- lar item of deduction is recognized built-in loss if the item would have been allowed as a deduction against gross income before the beginning of the recognition period under the per- centage of completion method.