ebali Corporation, a calendar year taxpayer utilizing the
completed contract method of accounting, constructed a building for
Samson, Inc., under a long-term contract. The gross contract price
was $2,300,000. Jebali finished construction in 2016 at a cost of
$2,100,000. However, Samson insisted that Jebali redo the doorway;
otherwise, the contract price would be reduced. The estimated cost
of redoing the doorway is $80,000. In 2017, the dispute is settled
and Jebali fixed the doorway at a cost of $65,000.

A) How much must Jebali include in gross income? What amount of
deductions is Jebali allowed for 2016?

B) In 2017, how much must Jebali include in gross income? What
amount of expenses can Jebali deduct in that year?