Domestic Production Activity Deduction

[OldJack]

My client does not buy the materials.

If your client does not buy the materials then he is not a manufacturer per this code definition... he is only providing a service and therefore does not get the deduction.

[Black Bart]

You explained it alright and I think

Did I explain this all right? Everyone understands what I said?

everybody understands it except me and you. For our own safety, we'd better just move off to the sidelines and let these two heavyweights slug it out. May the best lawyer win.

[OldJack]

and let these two heavyweights slug it out.

Are you saying we are fat?

[jainen]

That was my position

>>he is only providing a service and therefore does not get the deduction<<

That's what I've been saying from the very beginning. I thought it was perfectly clear from the original post.

[Unregistered]

everybody understands it except me and you. For our own safety, we'd better just move off to the sidelines and let these two heavyweights slug it out. May the best lawyer win.

Ah now I get it! That is why janien is the way he/she is. A lawyer, now the picture is becoming crystal clear. Thanks BB

[OldJack]

>>he is only providing a service and therefore does not get the deduction<<

That's what I've been saying from the very beginning. I thought it was perfectly clear from the original post.

Client owns a moulding shop. Has employees and payroll. The only thing that is done
in the shop is the making of moulding for builders. The builders pick up the finished
moulding and installs it themselves.
Does this qualify my client, that makes the moulding, for the Domestic Production
Activities Deduction? Form 8903?
Thanks.

Janien... how you would get that the materials were bought by the builder from the original post is pure genius and far beyond my abilities.

[jainen]

what they want

I am not a lawyer, although we have plenty of them out here in California. I'm not a he/she either, although we got plenty of them too. Also you are spelling my name wrong, so all in all you really don't understand me.

The reason I knew that the shop was not stocking materials and designing molding was not because of any special genius. I knew it was just providing a service because Bird Leg said in the original post that making molding is "the only thing that is done in the shop," and I know builders ordering custom molding have to control the material to get what they want.

[Unregistered]

jainen-well you just know everything always, now don't you.

[Bird Legs]

Jainen

and all others. Really appreciate your response to my question.
Have a good weekend.
My grandson is in my office right now shredding paper for me.

[OldJack]

<< right now shredding paper>>

Are they after you Bird Legs and are you leaving the country?

[S T]

More questions

Would a small manufacturer of computer related components qualify for this deduction. An S corp that manufacturers small cables, ribbon cables, etc and sells to a computer manufacturer or electronics manufacturer.

Sandy

[Bird Legs]

Old Jack-Shredding

old tax returns for me kept my 12 year old grandson busy for a few minutes while I
finished up some work. We then went out and got something to eat.
No, no one trying to chase me out of the country. Everyone thinks I am too old to
do any damage, nor any good. They just put up with me.

[mralert]

Domestic Prod. Deduction!

Do contractors that perform capital improvement renovations to residential apartments, qualify for this DPAD?

If so, how would they allocate 263A UNICAP costs if there is no inventory?

Would it be DPA receipts minus COGS, minus other direct costs, minus a ratable portion of indirect costs. The ratable portion of indirect costs is where I'm confused, because of a zero inventory.

[Bees Knees]

Do contractors that perform capital improvement renovations to residential apartments, qualify for this DPAD?

If so, how would they allocate 263A UNICAP costs if there is no inventory?

Would it be DPA receipts minus COGS, minus other direct costs, minus a ratable portion of indirect costs. The ratable portion of indirect costs is where I'm confused, because of a zero inventory.

According to this fact sheet from IRS, http://www.treas.gov/press/releases/...heetjs2200.pdf, it includes construction or substantial renovation of real property including residential and commercial buildings. So improvements pass the test. Repairs would not.

As to how to allocate indirect costs to inventory, even with zero inventory, this can be done. See TTB worksheet page 24-11.