Special rules for long-term contracts under section 460

Forms and Documents

Document Name	Status
Form 8697 Form 8697 Interest Computation Under the Look-Back Method for Completed Long-Term Form	New
TD 9137.rtf Supplementary Document	2016-07-22
Supporting_Statement_1545-1732 finalKD1.doc Supporting Statement A	2016-07-27

IC Document Collections

IC ID	Document Title	Status
222632	Form 8697 Interest Computation Under the Look-Back Method for Completed Long-Term Form	New
222623	TD 8929 - Accounting for Long-Term Contracts	New
222621	TD 8775 - Election Not to Apply Look-Back Methods in De Minimis Cases	New
19246	TD 8995 - Mid-Contract Change in Taxpayer	Modified

ICR Details

OMB Control No: 1545-1732	ICR Reference No: 201607-1545-036
Status: Historical Active	Previous ICR Reference No: 201304-1545-028
Agency/Subagency: TREAS/IRS	Agency Tracking No:
Title: Special rules for long-term contracts under section 460
Type of Information Collection: Revision of a currently approved collection	Common Form ICR:  No
Type of Review Request: Regular
OIRA Conclusion Action: Approved without change	Conclusion Date: 01/13/2017
	Date Received in OIRA: 07/29/2016
Terms of Clearance:

	Inventory as of this Action	Requested	Previously Approved
Expiration Date	01/31/2020	36 Months From Approved	01/31/2017
Responses	79,333	0	5,000
Time Burden (Hours)	99,078	0	10,000
Cost Burden (Dollars)	0	0	0

---

Abstract: Internal Revenue Code (IRC) section 1.460 provides rules for determining whether a contract for the manufacture, building, installation, or construction of property is a long-term contract under section 460 and what activities must be accounted for as a single long-term contract. Specific rules for long-term manufacturing and construction contracts are provided in §§ 1.460-2 and 1.460-3, respectively. A taxpayer generally must determine the income from a long-term contract using the percentage-of-completion method described in § 1.460-4(b) (PCM) and the cost allocation rules described in § 1.460-5(b) or (c). In addition, after a contract subject to the PCM is completed, a taxpayer generally must apply the look-back method described in § 1.460-6 to determine the amount of interest owed on any hypothetical underpayment of tax, or earned on any hypothetical overpayment of tax, attributable to accounting for the long-term contract under the PCM. TD 8929 requires that information be collected in order to notify the Commissioner of a taxpayer's decision to sever or aggregate one or more long- term contracts under the regulations. The statement is needed so the Commissioner can determine whether the taxpayer properly severed or aggregated its contract(s). The regulations affect any taxpayer that manufactures or constructs property under long-term contracts. TD 8775 and requires taxpayers to attach a notification statement to their returns when they make the election and TD 8995 is required to enable taxpayers to make look-back computations when the income from a long-term contract has been previously reported by another taxpayer.

---

Authorizing Statute(s): US Code: 26 USC 7805 Name of Law: Rules and regulations.
   US Code: 26 USC 460 Name of Law: Special rules for long-term contracts
  

Citations for New Statutory Requirements: None

---

Associated Rulemaking Information
RIN:	Stage of Rulemaking:	Federal Register Citation:	Date:
	Not associated with rulemaking

---

Federal Register Notices & Comments
60-day Notice:	Federal Register Citation:	Citation Date:
	81 FR 32385	05/23/2016
30-day Notice:	Federal Register Citation:	Citation Date:
	81 FR 49716	07/28/2016
Did the Agency receive public comments on this ICR? No

---

Number of Information Collection (IC) in this ICR: 4

IC Title	Form No.	Form Name
TD 8995 - Mid-Contract Change in Taxpayer
Form 8697 Interest Computation Under the Look-Back Method for Completed Long-Term	8697	Interest Computation Under the Look-Back Method for Completed Long-Term
TD 8775 - Election Not to Apply Look-Back Methods in De Minimis Cases
TD 8929 - Accounting for Long-Term Contracts

---

ICR Summary of Burden

	Total Approved	Previously Approved	Change Due to New Statute	Change Due to Agency Discretion	Change Due to Adjustment in Estimate	Change Due to Potential Violation of the PRA
Annual Number of Responses	79,333	5,000	0	74,333	0	0
Annual Time Burden (Hours)	99,078	10,000	0	89,078	0	0
Annual Cost Burden (Dollars)	0	0	0	0	0	0

Burden increases because of Program Change due to Agency Discretion: Yes

Burden Increase Due to: Miscellaneous Actions

Burden decreases because of Program Change due to Agency Discretion: No

Burden Reduction Due to:

Short Statement: Regulations relating to Section 460(b)(6) of the Internal Revenue Code have been amended multiple times and the IRS has obtained separate OMB clearance for rulemaking actions affecting §1.460. At this time, the IRS is consolidating these information collections imposed by 26 U.S.C. 460 under a single OMB control number. OMB control numbers 1545-1572, 1545-1650, and 1545-1031, will be merged under 1545-1732. The addition of TD 8775, TD 8929, and Form 8967 results in an annual number of response increase of 74,333 and an annual time burden increase of 89,078 hours.

---

Annual Cost to Federal Government: $0

Does this IC contain surveys, censuses, or employ statistical methods? No

Is the Supporting Statement intended to be a Privacy Impact Assessment required by the E-Government Act of 2002? No

Is this ICR related to the Affordable Care Act [Pub. L. 111-148 & 111-152]? No

Is this ICR related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, [Pub. L. 111-203]? No

Is this ICR related to the American Recovery and Reinvestment Act of 2009 (ARRA)? No

Is this ICR related to the Pandemic Response? Uncollected

---

Common Form ICR:  No

---

On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).

The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:

(a) It is necessary for the proper performance of agency functions;

(b) It avoids unnecessary duplication;

(c) It reduces burden on small entities;

(d) It uses plain, coherent, and unambiguous language that is understandable to respondents;

(e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

(f) It indicates the retention periods for recordkeeping requirements;

(g) It informs respondents of the information called for under 5 CFR 1320.8 (b)(3) about:

(i) Why the information is being collected;

(ii) Use of information;

(iii) Burden estimate;

(iv) Nature of response (voluntary, required for a benefit, or mandatory);

(v) Nature and extent of confidentiality; and

(vi) Need to display currently valid OMB control number;

(h) It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to be collected.

(i) It uses effective and efficient statistical survey methodology (if applicable); and

(j) It makes appropriate use of information technology.

If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.

Certification Date: 07/29/2016

---