Share with your friends

IRS practice units: Interest capitalization, accounting for developers and subcontractors

IRS practice units: Interest capitalization

The IRS Large Business and International (LB&I) division publicly released three “practice units”—part of a series of IRS examiner “job aides” and training materials intended to describe for IRS agents leading practices about tax concepts in general and specific types of transactions.


Related content

The practice units are:

  • Interest capitalization for self-constructed assets—This practice unit reflects changes made by Pub. L. No. 115-97 (often referred to as the “Tax Cuts and Jobs Act” (TCJA)); identifies taxpayers subject to section 263A(f); and covers the steps involved in determining how much interest must be capitalized to the basis of designated property.
  • Land developers and subcontractors – proper method of accounting—This practice unit also reflects changes made pursuant to the TCJA, and notes that developers and the subcontractors they hire to construct the common improvements (e.g., water lines, utilities, roads, sewers, parks) may be taking the position that their contracts are home construction contracts even though they do not construct any homes; and that, in general, taxpayers must use the percentage of completion method for these contracts.
  • Tax home for purposes of IRC section 911—This practice unit discusses the factors to be considered in determining an individual’s tax home for purposes of section 911.

Read the practice units on the IRS practice unit webpage (posting date of April 5, 2019).

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal