Discussion:Manufacturer deduction again
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Discussion Forum Index --> Advanced Tax Questions --> Manufacturer deduction again
Discussion Forum Index --> Tax Questions --> Manufacturer deduction again
| 6 September 2008 | |
| Client is a graphic artist.
She produces images in-house and then provides them to printers who use them to manufacture printed materials. Also, she contracts with printers to have the printed materials manufactured based on her designs and then sells them to her own customers. I'm thinking that her work is part of the manufacturing process and therefore she gets to take the manufacturer's deduction. Tangible property is definitely created. (She's good on the wage test since she is a corporation and pays herself wages.) What do y'all think? | |
| 6 September 2008 | |
| I do not agree. Design and development are intangible in nature and do not constitute manufacturing. Tangible property was made by the manufacturer. | |
| 7 September 2008 | |
| in my quick thoughts, I know of no 'manufacturer deduction'
I do know of a Domestic Production Activities Deduction ยง199. Maybe using the correct terms will help you in future searches? | |
ReadMyLips (talk|edits) said: | 7 September 2008 |
| I think the printers might be able to take the deduction as they are manufacturing the materials, but not the artist. | |
| 7 September 2008 | |
| Kevinh5 - Yes, I know the technical name is Domestic Production Activities Deduction, and I did search that phrase as well.
I was thinking the graphic artist might take the deduction because in my state, the sales tax people are very precise in defining the designs that graphic artists sell as personal property subject to sales taxes. Therefore, I was thinking that she would fall under the definition of manufacturing property. | |
| 7 September 2008 | |
| Smokeytax, you do want to read Reg 1-199 on the ownership of the product being manufactured. It depends on when/if the designer has ownership of the final product that they may qualify. I could not tell that a design, per se, qualified as a product. | |
