Form 8903: Domestic Production Activities Deduction for Pass-Thrus and Other Business Entities

Mastering Complex Determinations, Calculations and Reporting Challenges for the DPAD

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, February 25, 2015

Recorded event now available

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Course Materials

This course will arm tax return preparers with a deeper understanding to tackle the most difficult issues in completing Form 8903. The panel will explain approaches to correctly handle qualifying, calculating and claiming the Sect. 199 domestic production activities deduction on Form 8903.

Description

The section 199 Domestic Production Activities Deduction (DPAD) can be claimed by a wide-range of business entities and industries and can provide significant tax savings for companies that properly calculate the benefit. DPAD offers substantial tax savings for businesses, generally in the form of a deduction equal to 9% of qualifying production income or the taxpayer’s taxable income, whichever is less. In order to fully capture this benefit, tax advisors should enhance their understanding of the section 199 regulations and identify client-specific opportunities to optimize DPAD.

Optimizing DPAD often involves a surprisingly large number of decisions points and calculations, some of which also may impact a client’s foreign tax credit utilization.

Key issues facing advisors include: (i) proper identification of qualified and non-qualified revenue, (ii) proper allocation of cost of goods sold in conformity with the section 199 and 263A regulations, and (iii) expense allocation and apportionment under sections 199 and 861.

Listen as our panel of seasoned tax advisors offers their experiences with, and proposes alternatives for, handling the most difficult compliance hurdles in Form 8903 to take full advantage of tax savings for clients.

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Outline

  1. Review, domestic production activities deduction
    1. Amounts
    2. Qualifying taxpayers
  2. Preparation of Form 8903
  3. Particular Form 8903 compliance issues
    1. What meets QPAI and DPGR standards
    2. What else is deductible
    3. Small business simplified overall, simplified deduction and Sect. 861 methods
    4. Income limitations
    5. W-2 wages for 50% limit

Benefits

The panel will review these and other key questions:

  • Which activities and property qualify for section 199 benefits?
  • What unique rules are relevant when calculating DPAD for a pass-thru entity?
  • Should taxpayers prepare safe harbor calculations to support domestic production gross receipts determinations?
  • How should relevant costs be identified and allocated?
  • Are simplified deduction methods or de minimis rules applicable?
  • How should taxpayers determine whether the 50% of W-2 wages limitation will impact their benefit?

Faculty

John Manning, Esq.
John Manning, Esq.
The DPAD Group

Mr. Manning has over twenty years of broad-based federal tax experience, which includes six years as an attorney...  |  Read More

Dan Steele, CPA
Dan Steele, CPA
The DPAD Group

Mr. Steele's practice focuses extensively on export tax benefits, domestic production activities deductions,...  |  Read More

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