Question: Nathan uses the percentage of completion method to report income from his real estate construction contracts. A contract was begun in 2016 and completed in

Nathan uses the percentage of completion method to report income from his real estate construction contracts. A contract was begun in 2016 and completed in 2017. In 2016, Nathan reported gross income from the partial completion of the contract. In 2017, however, costs had increased above the original estimate. The contract was completed with the actual profit on the contract being less than the income from the contract reported in 2016. What mechanism should be used to correct for the overpayment of tax in 2016?

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