Domestic Production Deduction a HOAX

[John of PA]

It appears the bottom line here is that the new Domestic Production Credit only helps businesses that show a fair amount of profit. So the typical small business, who pays out most of the profits to the owners to live off of; after going through the calculations of allocating sales and expenses to new construction, end up with a tiny or no deduction at all. However they are helping the economy by providing jobs for new construction. Comments please!

[John of PA]

Deduction not credti

My mistake, this is a deduction and not a credit.

[jainen]

It's not a hoax

It's not a hoax. The Republicans have been quite open about the fact that their tax relief agenda supports large corporate interests at the expense of individuals and small business.

[John of PA]

Small vs Large Business

OK, Most large corporations show a profit, so they will benefit from this. Interesting how the congressmen, in press conferences, when they tell how great the new legislation is, don't give the whole story. By the way, the 179 deduction shoots down your theory that the Republicans are bias toward the large corporations.

[OldJack]

It's not a hoax. The Republicans have been quite open about the fact that their tax relief agenda supports large corporate interests at the expense of individuals and small business.

Oh please... are you not happy that your taxes having been lowered. I make it a point to calculate and show all my Democrat clients how much the new tax laws have saved them each year on their tax return. As to the QDPAD I haven't gotten that result analyzed yet but I expect that you are right that it doesn't amount to much.

[John of PA]

Repulicans

I agree Old Jack, not to mention that the large Corps provide jobs for us little guys. And as for Jainen, he can say whatever he wants about Republicans, I still like him.

[Unregistered]

When and where did the politicians say they would support the large corporations at the expense of the little guy? I want to read that.

[John of PA]

Domestic Production deduction

Getting back to the Domestic Production Deduction, it looks like we should look for a client involved in new construction who will show a profit, and has W-2 wages. In that case it may be worth breaking out sales and expenses into new construction and non-new construction; but only in such a scenario.

[Gretel]

Conclusions

My conclusion are that calculating the deduction cost probably more than the client would benefit (my small employer clients anyway).

Maybe I get an oil company as a client. It would be fun to see how the deduction works out with them after record profits.

[John of PA]

Agreed

Agreed Gabriele, this deduction is just not worth our while except in the scenario described above. Oil company profits, just watch, they won't last.

[JG EA]

Speaking of Domestic Production Deduction

I'm doing an S-Corp that may qualify. Although I can't find any instructions I did read an article from NATP about what qualifites. My software has form 8903 (but with no instructions either). Just the Income (minus the cost of goods and other things) and the payroll appear from 8903 onto the K-1. If this is correct then

if I can figure out if they qualify and

if I can figure out what things to subtract

then I can finish the 1120S and actually do the 8903 on the individual return.

Do you agree?

Do you know if all wages apply even the wages to the shareholder?

[jainen]

they won't help much

IRS recently published the instructions to Form 8903.

http://www.irs.gov/pub/irs-pdf/i8903.pdf

I'm afraid they won't help much.

[Snaggletooth]

Republican Shell Game

I agree Old Jack, not to mention that the large Corps provide jobs for us little guys. And as for Jainen, he can say whatever he wants about Republicans, I still like him.

Jainen can say whatever he wants about Republicans, and I still DONT like him. I just happen to agree with him on everything. We need his acid sometimes for Ph balance.

You have to consider the WHOLE economy, not just taxes. One example is they brag about furnishing more Pell Grants than ever before to college students. But the reason is because more college student families are making under $30,000 than ever before. As you know, the $30,000 threshold for disqualification hasn't risen since Pell was started. No more Republicans for me - and I am an arch-conservative (surprise, surprise).

O.K. I'll quit. This isn't a forum for politics.

[Bees Knees]

The domestic production deduction was put in place to replace trade subsidies for large U.S. corporations that exported products. Some international trade federation said the U.S. subsidies were illegal. If the U.S. did not stop this illegal practice, it could have made it more difficult for U.S. corporations to compete in the global market. To help the U.S. exporters who were about to lose their subsidies, Congress enacted this new deduction. The fact that some small businesses get a token deduction from this new law should not be viewed as a negative, given the fact that they never benefited before from the export subsidies under the old law.

[Matt Sova]

Well stated

That is a perfect explanation Bees. Those who think Republicans are evil-doers and only looking out for the big corp never, ever look at all the facts.