Domestic Production Activities Deduction / Section 199

The Domestic Production Activities Deduction is the second largest domestic tax break for Corporations. This deduction which is also called DPAD, the manufacturing deduction, or Section 199 replaced the former foreign sales corporation and extraterritorial income provisions of the tax code. One common misconception is that only manufacturers qualify for the deductions however the benefits also apply to software development, engineering, mining, construction, architecture, oil & gas, and agriculture.

The tax savings have increased over the years the deduction can be significant; up to 9% of net income related to qualified production activities. With the increased tax savings over the years the documentation requirements that the IRS requires of companies has also become more stringent. Gulati Consulting PC’s team of CPAs and Attorneys will help your Company navigate through the rules and regulations in order to maximize your tax savings while preparing the required supporting documentation.

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