News: domestic production deduction

Taxpayer Gets a Gift (Basket) – New Section 199 Case – Domestic Production Deduction

In perhaps a surprising outcome, a district court has ruled that assembling gift baskets qualifies as manufacturing for purposes of the Section 199 Domestic Production Activities Deduction (or Section 199 deduction). The company produces gift baskets from purchasing items such …

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IRS Issues Chief Counsel Advice on Section 199 Deduction

The IRS released a Chief Counsel Advice (CCA) memo on 3/29/13 on whether a publisher of books can claim a Section 199 domestic production deduction for its activities of producing books. However, the IRS segregated the activities into all activities …

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Section 199 – Online Software – New CCA IRS Guidance

This week the IRS released a new Chief Counsel Advisory Opinion (CCA) regarding Online Software and Section 199. The key issue was applying the exception for software that is ‘substantially identical’ available from third parties via download or shrink-wrap. Thus, …

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Section 199 – IRS Issues Guidance on Benefits and Burdens of Ownership

In a new Field Directive issued February 1, 2012, the IRS has provided examiners guidance on reviewing facts to determine which party to a transaction has the benefits and burdens of ownership in order to claim the Section 199 Domestic …

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First Ever Tax Court Case on Section 199 Domestic Production Deduction

In the first Tax Court case opinion on Section 199 deduction activities, the Tax Court today sided with the taxpayer in Gibson & Associates, Inc. v. Commissioner, 136 T.C. No. 10 (February 24, 2011). The taxpayer undertook three types of construction …

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Section 199 Deduction – 2010 Rate is Now 9%

The Section 199 Deduction is a valuable tax deduction for domestic production and manufacturing activities to incentivize retaining manufacturing jobs in the U.S. The definition of ‘production’ is also broad and also applies to software development and production of qualified …

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