Previous installments of Aronson’s Tax Compliance Series for Construction Contractors focused on methods of accounting, the lookback provision, and long-term contract adjustments. Today, we switch our focus to a fantastic opportunity to not only comply with IRS regulations, but benefit from a big tax deduction.
The Domestic Production Activities Deduction, created by the American Jobs Creation Act of 2004, is a gem! The deduction is equal to 9% of qualified production activities income (QPAI), limited to 50% of qualified W-2 wages paid for the year.
Qualified activities under this deduction include: