Discussion:Domestic Production Deduction
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| {{ForumReplyPost|UserID=Jsanchez|Date=17 November 2005|Text=The American Jobs Creation Tax Act of 2004 created new code [[Sec. 199. Deduction relating to income attributable to domestic production activities|sec. 199]] that provides a deduction for both corporation and individual business owners, effective for years beginning after 2004. The main beneficiaries of this deduction will be businesses that produce goods, develop software or construct property in the U.S. For tax years 2005 or 2006 the percentage is only 3%. Here are some of items not included as domestice production gross receipts. Sale of food or beverage prepared at a retail establishment. For this purpose, a retail establishment is real property leased, occupied or otherwose used by he taxpayer in its trade or business of selling food or beverages to the public at which retail sales are made. Therefore, a restaurant at which food and beverage are prepared, sold, and served to customers (or that offers only take-out food) is a retail establishment and not eligible for te production deduction. However, if the facility is only used to prepare food and beverage for wholesale sale, it is not a retail establishment and receipts woul be DPGR. A facility at which food or beverage are prepard (whether for human or non-human consumption) will not be treated as a retail establishment if less than 5% of the food or beverages that are sold at the facility during the tax year are retail sales. I know this is long, but this code section is very complex. (DPGR)= Domestic Production Gross Revenue | {{ForumReplyPost|UserID=Jsanchez|Date=17 November 2005|Text=The American Jobs Creation Tax Act of 2004 created new code [[Sec. 199. Deduction relating to income attributable to domestic production activities|sec. 199]] that provides a deduction for both corporation and individual business owners, effective for years beginning after 2004. The main beneficiaries of this deduction will be businesses that produce goods, develop software or construct property in the U.S. For tax years 2005 or 2006 the percentage is only 3%. Here are some of items not included as domestice production gross receipts. Sale of food or beverage prepared at a retail establishment. For this purpose, a retail establishment is real property leased, occupied or otherwose used by he taxpayer in its trade or business of selling food or beverages to the public at which retail sales are made. Therefore, a restaurant at which food and beverage are prepared, sold, and served to customers (or that offers only take-out food) is a retail establishment and not eligible for te production deduction. However, if the facility is only used to prepare food and beverage for wholesale sale, it is not a retail establishment and receipts woul be DPGR. A facility at which food or beverage are prepard (whether for human or non-human consumption) will not be treated as a retail establishment if less than 5% of the food or beverages that are sold at the facility during the tax year are retail sales. I know this is long, but this code section is very complex. (DPGR)= Domestic Production Gross Revenue | ||
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| + | {{ForumReplyPost|UserID=Snooks|Date=17 November 2005|Text=I too attended the UIS tax school although the location in which I attended they went into a lot of detail. It is my understanding that the deduction is limited to 50% of W-2 wages (not 1099 pay). They went on to say that farmers will qualify, but after checking my client base I find that my farmer clients do not have employees. This deduction is not restricted to large companies, but is a larger deduction when there is larger payroll. I believe the contractor issue requires the production and not repair. I have basement contractors (new construction) that will qualify, but carpet layers will not. At least that is my understanding of how this works. I would have to conclude that those carpenters that do mostly remodling and repair would not qualify. }} | ||
Revision as of 21:34, 17 November 2005
Discussion Forum Index --> Tax Questions --> Domestic Production Deduction
| 8 November 2005 | |
| Is this a deduction just for large corporations or can it be of help to a self-employed person, having 1 employee? I recently attended a tax school sponcered by the Il.University. This was one of the last items discussed and not much time was given to it. I have a several clients that have small businesses and have employees. One of them is a carpenter who does siding and home remodeling. I am wondering if his installation of these materials will quilify. Thank you Lkfordham 16:55, 8 Nov 2005 (CST) | |
| 17 November 2005 | |
| The American Jobs Creation Tax Act of 2004 created new code sec. 199 that provides a deduction for both corporation and individual business owners, effective for years beginning after 2004. The main beneficiaries of this deduction will be businesses that produce goods, develop software or construct property in the U.S. For tax years 2005 or 2006 the percentage is only 3%. Here are some of items not included as domestice production gross receipts. Sale of food or beverage prepared at a retail establishment. For this purpose, a retail establishment is real property leased, occupied or otherwose used by he taxpayer in its trade or business of selling food or beverages to the public at which retail sales are made. Therefore, a restaurant at which food and beverage are prepared, sold, and served to customers (or that offers only take-out food) is a retail establishment and not eligible for te production deduction. However, if the facility is only used to prepare food and beverage for wholesale sale, it is not a retail establishment and receipts woul be DPGR. A facility at which food or beverage are prepard (whether for human or non-human consumption) will not be treated as a retail establishment if less than 5% of the food or beverages that are sold at the facility during the tax year are retail sales. I know this is long, but this code section is very complex. (DPGR)= Domestic Production Gross Revenue | |
| 17 November 2005 | |
| I too attended the UIS tax school although the location in which I attended they went into a lot of detail. It is my understanding that the deduction is limited to 50% of W-2 wages (not 1099 pay). They went on to say that farmers will qualify, but after checking my client base I find that my farmer clients do not have employees. This deduction is not restricted to large companies, but is a larger deduction when there is larger payroll. I believe the contractor issue requires the production and not repair. I have basement contractors (new construction) that will qualify, but carpet layers will not. At least that is my understanding of how this works. I would have to conclude that those carpenters that do mostly remodling and repair would not qualify. | |
