The IRS just released temporary and proposed regulations that will impact the calculation of the Domestic Production Activities deduction (DPAD). If your business produces tangible property, films, performs oil related activities, or constructs real property in the U.S. these regulations will impact your taxes.
The Proposed regulations address and provide guidance on DPAD under section 199 of the Internal Revenue Code involving:
- oil related qualified production activities income
- qualified films
- activities in Puerto Rico
- determining domestic production gross receipts
- construction activities
- allocating cost of goods sold
- the terms manufactured, produced, grown, or extracted
- contract manufacturing
- hedging transactions
- agricultural and horticultural cooperatives
The temporary regulations clarify how taxpayers calculate W-2 wages for purposes of the W-2 wage limitation in the case of a short taxable year or an acquisition or disposition of a trade or business.