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

(a) In general Section 460(e) of the Internal Revenue Code of 1986 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 (in the case of a residential construction contract which is not a home construction contract, determined by substituting 3-year for 2-year in subparagraph (B)(i)) after the requirements of clauses (i) and (ii) of subparagraph (B) are not met, (2) in paragraph (5)(A), by striking paragraph (4) and inserting paragraph (3), and (3) by striking paragraph (4) and redesignating paragraph (5) as paragraph (4). (b) Application of exception for purposes of alternative minimum tax Section 56(a)(3) of such Code 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 after the date of the enactment of this Act.