Many taxpayers have sought to use the lucrative and broad-based incentives under new Code Sec. 199 since the domestic production activities deduction (DPAD) was created in 2004. But partnerships and other passthroughs are finding their access to the deduction limited by the amount of W-2 wages that can be passed through to the owners. In some instances, those limitations could block a partnership from taking the deduction at all, notes James M. Kehl in a recent issue of TAXES—The Tax Magazine from CCH. In this article, Mr. Kehl examines in detail strategies practitioners can use to help passthrough owners optimize their ability to use the DPAD to reduce their tax burdens. He offers approaches that will help partnerships leverage these tax incentives that are being used by many companies to achieve significant tax savings.
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This story is from the CCH’s monthly Focus on Tax newsletter, which provides advise and guidance on federal and state tax issues for tax and accounting professionals.
Read this article from CCH’s Journal of Taxation of Financial Products.