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Most commonly taken advantage of by traditional manufacturers for tax savings is the Domestic Production Activities Deduction (or “Section 199”). If you’re like most businesses, you may not know that the “manufacturers’ deduction” isn’t limited to traditional manufacturers. Businesses engaged in activities such as construction, engineering, architecture, computer software production and agricultural processing also may be eligible for a deduction up to 9 percent of net income from qualified production activities. Doeren Mayhew’s manufacturing accounting professionals explain below.
You are most likely eligible for the deduction if your business is involved in any type of domestic manufacturing or production activities. Outside of traditional manufacturing, this could include:
However, there are some limitations that are specifically excluded:
While calculating the actual deduction can be complex, you can estimate your potential deduction by:
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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