### Question
How is the "home construction contract" defined?


### Answer
The term **home construction contract** is defined in *26 U.S.C. § 460* as follows -

> any construction contract if 80 percent or more of the estimated total contract costs (as of the close of the taxable year in which the contract was entered into) are reasonably expected to be attributable to activities referred to in paragraph (4) with respect to—


(i) dwelling units (as defined in section 168(e)(2)(A)(ii)) contained in buildings containing 4 or fewer dwelling units (as so defined), and


(ii) improvements to real property directly related to such dwelling units and located on the site of such dwelling units

#### Citation:
  - *26 U.S.C. § 460*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter E-Accounting Periods and Methods of Accounting > PART II-METHODS OF ACCOUNTING > Subpart B-Taxable Year for Which Items of Gross Income Included**

