Taxation of homebuilding contractors has been subject to IRS scrutiny, particularly in complying with cost capitalization issues and revenue recognition and costing out units sold. Discuss precise approaches to comply with the costing rules, avoid IRS audit adjustments and the most beneficial tax result for the home builder/developer. An in-depth analysis of the tax accounting methods for homebuilding activities will be provided, including applying IRC Section 263A - uniform capitalization requirements and IRC Section 461 - economic performance.