Domestic Production Activities Credit

[Duane Anderson]

Clearly manufacturing qualifies for the above credit. And I believe home building does also....Does re-modeling qualifty for the creit?

A prior client returned to me, but the prior accountant did not take the credit in 2010...Taxpayer had a loss in 2011.

Before I amend a previous accountants tax return I want to get your opinions as to whether re-modeling qualifites as "manufacturing" and qualifites for the above credit. I have not been able to confirm this with the IRS pubs or Tax Materials....Thanks Duane Anderson

[BHoffman]

Clearly manufacturing qualifies for the above credit. And I believe home building does also....Does re-modeling qualifty for the creit?

A prior client returned to me, but the prior accountant did not take the credit in 2010...Taxpayer had a loss in 2011.

Before I amend a previous accountants tax return I want to get your opinions as to whether re-modeling qualifites as "manufacturing" and qualifites for the above credit. I have not been able to confirm this with the IRS pubs or Tax Materials....Thanks Duane Anderson

Hi Duane - not to pick nits, but it's a deduction and not a credit

Your DPAD is generally 9% of the smaller of:

the qualified production activities income (nothing if there is a loss from a pass-thru entity)

...or...

the AGI of the individual figured without the DPAD (nothing if there is a loss).

So, it appears that since your client shows a loss before figuring in the DPAD, the DPAD is not relevant and not to be included on the tax return.

FYI: DPAD is available for brand new construction. This does not include new paint, new carpet, new cabinets, new roof, new interior wall, etc. It would include a new room addition or a new garage or something new that was added to the existing building. I think it would include a new patio. I'm not sure if it would include the enclosure of an existing patio.