Exception to percentage of completion method of accounting for certain residential construction contracts

(a) In general Section 460(e) is amended— (1) in paragraph (1)— (A) by striking home construction contract both places it appears and inserting residential construction contract, and (B) by inserting (determined by substituting 3-year for 2-year in subparagraph (B)(i) for any residential construction contract which is not a home construction contract) after the requirements of clauses (i) and (ii) of subparagraph (B), (2) by striking paragraph (4) and redesignating paragraph (5) as paragraph (4), and (3) in subparagraph (A) of paragraph (4), as so redesignated, by striking paragraph (4) and inserting paragraph (3). (b) Application of exception for purposes of alternative minimum tax Section 56(a)(3) is amended by striking any home construction contract (as defined in section 460(e)(6)) and inserting any residential construction contract (as defined in section 460(e)(4)). (c) Effective date The amendments made by this section shall apply to contracts entered into in taxable years beginning after the date of the enactment of this Act.