Use Form 8697 to figure the interest due or to be refunded under the look-back method of section 460(b)(2) on certain long-term contracts that are accounted for under either the percentage of completion method or the percentage of completion-capitalized cost method.
The taxpayer must file Form 8697 for each tax year in which they completed a long-term contract entered into after February 28, 1986, that they accounted for using either the percentage of completion method or the percentage of completion-capitalized cost method for Federal income tax purposes. The taxpayer also must file Form 8697 for any tax year in which the contract price or contract costs are adjusted for one or more of these long-term contracts from a prior year.
TaxSlayer Pro includes an entry point for the look-back interest due as calculated on Form 8697 but does not include the form itself. You can complete the form at the IRS website, print it to PDF, and attach the PDF to the return. (If Form 8697 results in the taxpayer being due a refund, the form needs to be mailed to the IRS separately from the tax return. No entry is made in Form 1040.)
Additional Information:
IRS: Form 8697, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts