Domestic Production Activities Deduction - Plumber

[Bill Tubbs]

I have a Sch C plumber that I believes qualifies for the DPAD with Form 8903, but the prior preparer didn't include Form 8903 so I'm questioning myself (I don't deal with this much at all -- and when I do it's normally from a S Corp passthrough).

Sch C plumber operates entirely within Wisconsin, so all activity is domestic.

Anyhow, I'm figuring, Form 8903:
Line 1: Gross receipts from Sch C, Line 1
Line 2: COGS From Sch C, Line 4
Line 4: what gets entered here??? Confused by the "other deductions" that the instructions mention -- any help would be fabulous!

Thanks,
Bill

[BOB W]

Bill....

... use the simplified method. It allows cogs and all other expenses on one line. The form profit must equal the C profits.

[veritas]

Does the plumber have employee wages?

If not no deduction.

[Bill Tubbs]

Veritas -- Yes, the plumber has $45,000 in wages paid.

Bob -- Which value do I take from Sch C (Line 31 - Net Profit) then for F8903, Line 2?

Bill

[ChEAr$]

But.....

Veritas -- Yes, the plumber has $45,000 in wages paid.

Bob -- Which value do I take from Sch C (Line 31 - Net Profit) then for F8903, Line 2?

Bill

Does the plumber produce anything? or is he just a plumber who does repair work?

Only if he produces as in new construction would he qualify.

[BOB W]

Bill....

Simplified method

Line 1 is sales
line 2 is all expenses ( include wages here also)
line 3 should equal net profit ( program calc)
line 4 is wages paid

[veritas]

Does the plumber produce anything? or is he just a plumber who does repair work?

Only if he produces as in new construction would he qualify.

Or major renovation.

[Bill Tubbs]

ChEAr$ -- good point -- will have to ask what kind of work he does. If 70% of work is qualifying work, do I just multiply whatever amounts I would put on Form 8903 Line 1 & 2 by 70%?

Bob -- not seeing what line numbers you're referring to. But now I'm figuring on Form 8903, Line 5 equals Sch C (Line 31 - Net Profit). Form 8903 line 2 would then be Sch C lines 4+ 28 + 30.

Bill

Thanks all for your help thus far. If there are any further comments, this DPAD-newbie would appreciate them as well.