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Domestic Production Activities Deduction

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    #1

    Domestic Production Activities Deduction

    I have 2 s corps that seem to qualify for this deduction. One installs hardwood floors. Does he get the deduction only on the floors he installs in new construction or on any floors that he installs?

    The other is a draftsman or engineer. I think he qualifies too.

    Since they are s corps, how do you figure the credit? Is is based on both the W-2 wages and the income from the business?

    I am thoroughly confused.

    Linda F
    Tags: None
    #2
    S-corp

    The deduction is based on wages only. If there is one s/h and he takes a very low wage and there are no other employees, the credit is limited to his wage percentage.
    I would put a favorite quote in here, but it would get me banned from the board.

    Comment

      #3
      May be limited

      by wages, but it is the lower of the two. Floors is beyond me.

      Comment

        #4
        Linda....

        .... both the SCorp and the 1040 need to compute the deduction. Review the form for the required data need to calculate the "Domestic Production" for each tax return. And Yes to both types of businesses.
        This post is for discussion purposes only and should be verified with other sources before actual use.

        Many times I post additional info on the post, Click on "message board" for updated content.

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          #5
          Where on the 1120S does this deduction get computed? I have looked but can't seem to find it.

          After I posted this, I went into the adjustments menu of my program and put the figures in and it computed the deduction.

          This year it isn't much, but if I understand correctly the limitation won't be there in 2007.

          Linda F

          Comment

            #6
            Program???

            Call your software support and they will direct you for the Corp and the 1040. If you have CS let me know.
            This post is for discussion purposes only and should be verified with other sources before actual use.

            Many times I post additional info on the post, Click on "message board" for updated content.

            Comment

              #7
              Have Taxslayer

              I found it on the 1040. But will call them tomorrow about the 1120S.

              Thanks to all for the help.

              Linda F

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