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Government contracting · Tax planning
Federal contractors live under two rulebooks: the FAR for contract costs and the Internal Revenue Code for taxes. Our government contracting and tax teams plan for both, so savings never create a compliance problem.
Serving United States, Virginia, Washington, DC, Maryland.
What we handle
Costs that are unallowable under FAR Part 31, such as certain entertainment, lobbying or excess compensation, may still be deductible for tax, and the reverse is sometimes true. Keeping the two separate lets contractors claim every legitimate deduction without affecting rates. Accounting method choices, including cash versus accrual for qualifying small businesses and the treatment of long-term contracts under section 460, can defer tax meaningfully.
Engineering and software development work may qualify for research credits and section 174A expensing, though government-funded research is excluded. Owners of 8(a) and small businesses also need S corporation compensation planning, Virginia pass-through entity tax and, eventually, sale planning that weighs asset versus stock deals and QSBS.
Speak with an advisorWhere we help
Defines unallowable costs for contract pricing, separate from tax deductibility.
Qualifying small businesses may use the cash method under the gross receipts test.
Long-term contracts generally use the percentage-of-completion method, with small contractor exceptions.
Research funded by a government contract is not qualified research.
Our approach
A senior advisor reviews your facts and documents.
Scope, fees and timeline in an engagement letter.
Returns, elections and forms prepared and reviewed.
IRS contact and planning all year.
Questions
If your question isn't here, call (703) 880-8412 and you'll reach a person.
Many are. Contract allowability and tax deductibility are separate tests, so we track them separately.
A business under the section 448 gross receipts threshold generally can, which can defer tax on receivables.
Internally funded research can qualify, but research paid for by the government under the contract does not.
Start early: structure, clean books, QoE readiness and the asset versus stock decision all affect after-tax proceeds.
Latest updates
SBA published a final rule titled Removing Constitutional Concerns From SBA Programs. Current and prospective 8(a) participants should review how eligibility and certification are affected.
Source: Federal Register
Proposed size standard changes can affect whether a contractor qualifies for set-aside awards. Check your primary NAICS codes against the proposal.
Source: Federal Register
The proposal would replace the former presumption with a single individualized test. Comments closed July 13, 2026.
Source: Legal 500
Related
DCAA-compliant accounting systems, incurred cost submissions, indirect rates, pre-award surveys and SBA 8(a) support for federal contractors in the Washington, DC region and nationwide.
Learn moreHeadquartersAddress, local tax issues and the full range of services in Northern Virginia.
Learn moreDCAA compliance for government contractors: SF 1408 accounting system readiness, DFARS business system rules, timekeeping, indirect rate structures, provisional billing rates, incurred cost submissions and DCAA audit support.
Learn moreFederal contractorsIncurred cost submission preparation for federal contractors in Northern Virginia and the DC region: DCAA ICE model schedules, indirect rate reconciliation, overdue years and audit support.
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