DPAD for Sch C w/no W-2 employees

[AZ-Tax]

TTB 8-10. Who qualifies for the deduction? Any taxpayer with all three
of the following qualifies for DPAD.

• A positive amount of QPAI,
• A positive AGI for an individual, estate, or trust, or positive
taxable income for all other taxpayers, and
• Form W-2 wages paid to employees of the taxpayer. See W-2
wages,

Is there any exception for which "W-2 wages paid to employees" does not apply on a Sch C business?

[Lion]

I haven't heard of any. For most of my clients, DPAD is limited by W-2 wages or lack thereof. (I get a kick out of all the K-1s that provide copious detail re DPAD with notes and statements but W-2 wages of 0!)

[AZ-Tax]

Form W-2 wages from an S corporation or partnership. S corporations and partnerships that meet specific requirements can choose to figure Form W-2 wages at the entity level and report the allocated portion of Form W-2 wages on Schedule K-1 to the S corporation shareholder or partner who then combines the allocated portion with Form W-2 wages from other sources on Form 8903 to determine the DPAD.
If the S corporation or partnership meets the requirements to be classified as one of the eligible entities listed below, it can figure Form W-2 wages at the entity level and allocate Form W-2 wages to S corporation shareholders or partners.
•
Eligible small pass-through entity. See S corporations and partnerships, under Small Business Simplified Overall Method, on page 5 for the requirements.

•
Eligible widely-held pass-through entity. See S corporations and partnerships, under Simplified Deduction Method, on page 6 for the requirements.

http://www.irs.gov/instructions/i8903/ch01.html#d0e861

In your opinion, do you think if the Sch C taxpayer elects to be taxed as a single shareholder S-Corp drawing a W-2 salary and the business product itself qualifies for DPAD, the W-2 employee issue would be solved?