Section 199, Domestic Production Activities Deduction

Section 199, Domestic Production Activities Deduction

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Internal Revenue Code (I.R.C) Section 199, the Domestic Production Activities Deduction (DPAD) was created as part of the American Jobs Creation Act of 2004 to incentivize companies engaging in certain activities to keep and/or create jobs in the United States.

Section 199 allows the taxpayer to take a permanent deduction that is equal to 9 percent of the lesser of Qualified Production Activites Income (QPAI) or Taxable Income. The deduction can be equivalent to a 3 percent tax rate reduction on qualified income. 

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