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Domestic Production Activities Deduction Studies

What Is DPAD?

The Domestic Production Activities Deduction under Section 199 (DPAD) is very complex, requiring business to ensure they are calculating this deduction correctly and have the proper documentation to substantiate it. Alternatively, manufacturing under this provision is very broadly defined and a lot of taxpayers do not realize that they are eligible to take the DPAD, leading them to overlook this deduction.

Manufacturers, software developers, energy producers, construction companies, and engineering or architectural service providers are eligible to claim the 9 percent DPAD if they have taxable income. You need specialized professionals to make sure you get the full benefit of the deduction and mitigate any potential exposure to additional taxes due to errors and as a result penalties and interest.

How We Can Help

Perform a detailed assessment of all the revenue streams to identify which activities qualify for Section 199

Calculate your gross margin at the SKU level, as prescribed in the regulations

Analyze how you can maximize the relevant section 861 regulations and get the most benefit out of W-2 limitations

Compose a detailed report substantiating the calculation in case of an IRS or state audit and providing support during audit

Assist internal personnel in creating a process to ensure future data and supporting documentation are accumulated on a contemporaneous basis

Maximize Your Eligible Section 199 Deductions

Contact us today to learn more about how we can assist in maximizing your eligible Section 199 Deductions.