(c) of section 263A is amended by adding at the end the following new paragraph: (8) Exclusion from inventory rules Nothing in this section shall require the use of inventories for any taxable year by a qualified taxpayer (within the meaning of section 471(c)(3)) who is not required to use inventories under section 471 for such taxable year. . (b) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 203. Modification of rules for capitalization and inclusion in inventory costs of certain expenses (a) Gross receipts exception To apply to property produced by the taxpayer Section 263A(b) is amended by striking all that follows paragraph (1) and inserting the following new paragraphs: (2) Property acquired for resale Real or personal property described in section 1221(a)(1) which is acquired by the taxpayer for resale. (3) Exception for small businesses This section shall not apply to any property produced or acquired by the taxpayer during any taxable year if the taxpayer is a qualified taxpayer (as defined in section 471(c)(3)) for the taxable year. (4) Films, sound recordings, books, etc For purposes of this subsection, the term tangible personal property shall include a film, sound recording, video tape, book, or similar property. (5) Coordination with section 481 If a taxpayer changes its method of accounting because this section does not apply to the taxpayer by reason of the exception under paragraph (3) or this section applies to the taxpayer because such exception no longer applies to the taxpayer— (A) such change shall be treated as initiated by the taxpayer, and (B) such change shall be treated as made with the consent of the Secretary. . (b) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 204. Increase in gross receipts test for construction contract exception to percentage of completion method (a) Increase (1) In general Clause (ii) of section 460(e)(1)(B) is amended to read