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    9 Replies Latest reply on Feb 11, 2009 6:05 PM by minhazlakhani

    Domestic Production Activities Deduction

    Fact_Finder Adventurer
      Is anyone familiar with this business tax deduction? Apparently it was introduced as part of the American Jobs Creation Act of 2004.

      I'm not sure if we're taking it...or even if we qualify.

      I'm starting some online research on the topic, but was hoping someone might be able to "nutshell" it for me so i won't have to wade through the Tax Code.

        • Re: Domestic Production Activities Deduction
          dublincpa Scout

          A business engaged in the following lines of business may qualify for the Domestic Production Activities Deduction. These are the "qualified production activities" eligible for claiming the deduction under Internal Revenue Code Section 199:

          • Manufacturing based in the United States,
          • Selling, leasing, or licensing items that have been manufactured in the United States,
          • Selling, leasing, or licensing motion pictures that have been produced in the United States,
          • Construction services in the United States, including building and renovation of residential and commercial properties,
          • Engineering and architectural services relating to a US-based construction project,
          • Software development in the United States, including the development of video games.

          The following lines of business are specifically excluded from claiming the Domestic Production Activities Deduction:

          • Construction services that are cosmetic in nature, such as painting.
          • Leasing or licensing items to a related party.
          • Selling food or beverages prepared at a retail establishment.

          What I am not seeing here that I recall from seminars is that agrucultural, fishing and mining activities also qualify.
          1 of 1 people found this helpful
          • Re: Domestic Production Activities Deduction
            minhazlakhani Newbie
            Hi: We are Software company and provide software to hospitals. We do have US operations and we outsource some work to other countries such as India for support etc however our core developers are based in US... Can we qualify for this deduction.