Form 8903 Domestic production activities Deduction

[fuller7378]

I am trying to determine if the domestic production activities deduction is limited by the AGI of the taxpayer or the taxable income of the S Corp that the taxpayer is 100% owner of his own construction company. I picked up this client from a previous CPA who limited the 9% deduction to the income of the S Corp instead of the taxpayers AGI. It appears that the limitation is based on the taxpayers AGI; not the taxable income of the S Corp. I am basing this on my research and following the software instructions. If that is the case, I believe an amended return is in order. Any thoughts?

[Koss]

DAPD and S-Corp

I agree...

The deduction is limited to 9% of the taxable income of the taxpayer. In this context, the taxpayer is the individual S-corp shareholder, not the S-corp.

The S-corp is not permitted to take the deduction. It has to be passed through to the shareholder on the K-1. The taxpayer is the person who actually claims the deduction.

BMK