C12-Chp-03-3-Section-199-Prod-Activities-Ded

C12-Chp-03-3-Section-199-Prod-Activities-Ded -...

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37cdbda652258a1e5fd2b9d8bccad2c40b347710.doc. Downloaded from CCH- 12-30-2010. Page 1 of 5 SEC. 199. Income Attributable To Domestic Production Activities. (a) Allowance of Deduction . (1)In general. There shall be allowed as a deduction an amount equal to 9 percent of the lesser of (A) the qualified production activities income of the taxpayer for the taxable year, or (B) taxable income (determined without regard to this section) for the taxable year. (2) Phasein. (Information for transition in past years omitted here.) (b) Deduction Limited to Wages Paid . (1) In general. The amount of the deduction allowable under subsection (a) for any taxable year shall not exceed 50 percent of the W-2 wages of the taxpayer for the taxable year. (2) W-2 wages. For purposes of this section (A) In general. The term "W-2 wages" means, with respect to any person for any taxable year of such person, the sum of the amounts described in paragraphs (3) and (8) of section 6051(a) paid by such person with respect to employment of employees by such person during the calendar year ending during such taxable year. (B) Limitation to wages attributable to domestic production. Such term shall not include any amount which is not properly allocable to domestic production gross receipts for purposes of subsection (c)(1). (C) Return requirement. Such term shall not include any amount which is not properly included in a return filed with the Social Security Administration on or before the 60th day after the due date (including extensions) for such return. (D) Special rule for qualified film. In the case of a qualified film, such term shall include compensation for services performed in the United States by actors, production personnel, directors, and producers. (3) Acquisitions and dispositions. The Secretary shall provide for the application of this subsection in cases where the taxpayer acquires, or disposes of, the major portion of a trade or business or the major portion of a separate unit of a trade or business during the taxable year. (c) Qualified Production Activities Income . For purposes of this section (1) In general . The term "qualified production activities income" for any taxable year means an amount equal to the excess (if any) of— (A) the taxpayer's domestic production gross receipts for such taxable year, over (B) the sum of (i) the cost of goods sold that are allocable to such receipts, and (ii) other expenses, losses, or deductions (other than the deduction allowed under this section), which are properly allocable to such receipts. (2) Allocation method. The Secretary shall prescribe rules for the proper allocation of items described in paragraph (1) for purposes of determining qualified production activities income. Such rules shall provide for the proper allocation of items whether or not such items are directly allocable to domestic production gross receipts. (3) Special rules for determining costs
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C12-Chp-03-3-Section-199-Prod-Activities-Ded -...

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