Posted by: Coto Legal Services, PLC | April 3, 2011

Commonly Missed Business Deduction

A commonly missed business deduction….

Make sure your tax preparer reduces your taxes by taking advantage of the Domestic Production Activity Deduction.   Businesses with qualified production activities can take a tax deduction of 9% from net income in 2010. Also, review your last 3 tax returns to make sure that you took this deduction.  If not, you can amend your prior returns to receive a refund.   The Domestic Production Activity Deduction can yield substantial tax savings.

Types of business that may qualify for the Domestic Production Activities Deduction:

  • Manufacturing based in the United States,
  • Selling, leasing, or licensing items that have been manufactured in the United States,
  • Selling, leasing or licensing motion pictures that have been produce4d in the United States
  • Construction services in the United States, including building and renovation of residential and commercial properties,
  • Engineering and architectural services relating to US based construction project.
  • Software development in the United States, including the development of video games.

Note, however, that construction services that are merely cosmetic, such as painting do not qualify for this deduction.

The deduction is subject to some limitations.  The deduction cannot exceed adjusted gross income for sole proprietorships, partnerships, S corporations or limited liability companies or taxable income for C corporations.  Furthermore, the deduction cannot exceed 50% of wages.


Contact Coto Legal Services, PLC if you have any questions about this deduction or any other tax strategy.  Please visit our website at or write to us at:  rcoto@cotolegal. Com

Information on this blog is not intended to be legal advice and visiting this blog does not establish an attorney-client relationship.

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