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George operates a business that generated adjusted gross income of $250,000 and taxable income of $170,000...

George operates a business that generated adjusted gross income of $250,000 and taxable income of $170,000 this year (before the domestic production activities deduction). Included in income was $70,000 of qualified production activities income. George paid $60,000 of wages to employees engaged in domestic manufacturing. What domestic production activities deduction will George be eligible to claim this year?(year 2019)

A) None B) $6,300 C) $7,200 D) $15,300 E) $22,500

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Answer #1

Calculation:

domestic manufacturing deduction =9%of QPAI or 50% of wages paid ti employees engaged in domestic manufacturing,which ever is lower

= 70,000*9% or 60,000*50%

= 6,300 or 30,000

Therefore, domestic manufacturing deduction = 6,300

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