SACRAMENTO—If you could invoice your customers now but report the income for tax purposes later, you’d do it, wouldn’t you? After all, if you’re like most developers, you could probably use that money in your business rather than simply turning it over to the IRS. But as we’ll see, the rules around this are a bit murky—at least for developers involved with land-only improvements.

Typically, contractors with average receipts over $10 million are required to report taxable income on long-term contracts (those completed over two or more tax reporting years) on a percentage-of-completion method. This requires them to estimate a contract’s overall profit and recognize it proportionately over the life of the project.

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