Section 199: Domestic Production Activities Deduction, What Counts?

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“Big Time Construction Corporation” made a significant profit this year resulting in higher taxable income than expected. Therefore, Big Time Construction Corporation is exploring opportunities to reduce their tax liability. As a construction contractor who builds or renovates real properties in the United States, the Company is eligible to take advantage of the IRC Section 199 deduction also known as The Domestic Production Activities Deduction (“DPAD”).

The DPAD encourages domestic production activities by allowing taxpayers a 9% deduction on the lesser of Qualified Production Activities Income (QPAI), or taxable income for corporations before the section 199 adjustment, or adjustable gross income …read more

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