Section 199 help needed...

[Mary]

I've never looked at Section 199 before now because I thought it only pertained to businesses who made something (hence manufacture/produce), but one of my clients, a clothing retailer, claims he is entitled to this deduction because he sells goods that have been manufactured in the U.S.

Is that true?

Thanks.

[Snaggletooth]

Mary

Surprised no one has answered. If you are new to the board, welcome.
I'll respond with this worthless answer just to get the folks to give you another look.
Bees Knees and Armando normally jump on guest topics when they have time.

If no one answers, I'll do a little research in an attempt to discuss this intelligently with you. I have motive enough -- I'll have a corporate return with this deduction on it sometime in November.

Regards, Ron Jordan, Manchester, TN

[Nursery]

Sec. 199

I also need help! I have a client that has a wholesale Nursery and Horticulture business; he mainly grows plants and then sells them to Retail Nursery and landscapers. Does he qualify for Sec. 199?

[Bird Legs]

Sect. 199 Credit

See TTB page 8-18. Also, IRS Notice 2005-14 and form 8903 and the instructions.
Also try Googling, type in Domestic Production Activities Deduction.
In the case of the Clothier retailer, they could take the credit if and only if, they also
made the clothes.
As far as the nursery, I would think so, as long as they raised their own plants, flowers,
etc. and then sold them.

[Bees Knees]

Retailers do not get this deduction. The manufacturer that produced the product would get it, but not the wholesaler or retailer that is merely buying and selling stuff.

Most of us can ignore this deduction if we don't have manufacturing clients. The exception would be our clients who are in the construction trades, such as home construction contractors and their subs.

[Mary]

Thank you....

I did research it and discover that my client is not entitled to the deduction and after reading up on it, I don't think any of my clients will qualify for it.

Thanks.