[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2897 Introduced in Senate (IS)]

  2d Session
                                S. 2897

    To amend the Internal Revenue Code of 1986 to allow the use of 
  completed contract method of accounting in the case of certain long-
               term naval vessel construction contracts.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 20, 2000

  Mr. Robb (for himself Mr. Breaux, Ms. Landrieu, Ms. Snowe, and Mr. 
    Warner) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
    To amend the Internal Revenue Code of 1986 to allow the use of 
  completed contract method of accounting in the case of certain long-
               term naval vessel construction contracts.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. MODIFICATION OF ACCOUNTING RULES FOR CERTAIN NAVAL LONG-TERM 
              CONSTRUCTION CONTRACTS.

    (a) In General.--Section 460(e)(1) of the Internal Revenue Code of 
1986 (relating to exception for certain construction contracts) is 
amended by striking ``or'' at the end of subparagraph (A), by striking 
the period at the end of subparagraph (B) and inserting ``, or'', and 
by inserting after subparagraph (B) the following new subparagraph:
                    ``(C) a qualified naval construction contract for 
                which an election is made under paragraph (7).''.
    (b) Qualified Naval Construction Contract.--Section 460(e) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new paragraph:
            ``(7) Qualified naval construction contract.--
                    ``(A) In general.--A taxpayer may elect to use the 
                completed contract method of accounting with respect to 
                any qualified naval construction contract.
                    ``(B) Definition.--For purposes of paragraph (1), 
                the term `qualified naval construction contract' means 
                a contract--
                            ``(i) entered into by the taxpayer with the 
                        Federal Government for the building, 
                        construction, reconstruction, or rehabilitation 
                        of a naval vessel, and
                            ``(ii) which the taxpayer estimates (at the 
                        time such contract is entered into) will be 
                        completed more than 24 months after the 
                        contract commencement date of such contract.
                    ``(C) Effect of election.--An election under this 
                paragraph shall apply to all contracts of the taxpayer 
                which are entered into during the taxable year in which 
                the election is made or any subsequent taxable year.
                    ``(D) Separate contract.--For purposes of applying 
                this paragraph, in the case of a qualified naval 
                construction contract which covers more than 1 vessel, 
                each vessel covered by the contract shall be treated as 
                covered by a separate contract.
                    ``(E) Earnings and profits.--Section 312(n)(6) 
                shall not apply to a taxpayer which has made an 
                election under this paragraph with respect to a 
                qualified naval construction contract.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to contracts entered into on or after January 1, 
2000.
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