Section 199 (Domestic Production Activities Deduction)

All business involved in manufacturing should consider the manufacturing deduction under IRC § 199. While the deduction comes with a complex set of rules, it nonetheless represents significant tax savings for businesses performing domestic manufacturing and certain other production activities.

The scope of our services includes the following:

  • Determine relevant Client facts, based upon our review of the Client’s corporate structure, operations, inter-company and third party agreements, and other relevant information (including discussions with appropriate Client personnel, if and as needed to confirm relevant facts);
  • Complete a comprehensive technical analysis of the Client’s Qualified Production Activities Income (”QPAI”) position, including a technical determination of those Client transactions giving rise to “domestic production gross receipts” for QPAI purposes;
  • Develop specific processes and procedures for collection and reconciliation of necessary Client sales and cost of sales data for all relevant product sales;
  • Complete comprehensive QPAI calculations for purposes of the Client’s year-end financial close and using Thinkdeveloped methodologies for optimizing apportionment of cost of sales and Reg. 1.861-8 expenses taking into account any interplay and required consistency between QPAI, ETI, and the foreign tax credit;
  • Document the factual, technical, and financial analyses described above in items 1 – 4 for year-end financial purposes in technical memoranda confirming our analysis, calculations, and determinations with respect to the appropriate QPAI deduction;
  • Present and discuss the results of our comprehensive QPAI analysis and calculation;
  • Prepare relevant Federal income tax forms and schedules for QPAI purposes;
  • Prepare an appropriate “tax provision to tax return” reconciliation analysis; and
  • Prepare appropriate IRS audit trail reports for QPAI purposes.

Contact us to learn more

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