The fickle Section 199 domestic production deduction, which benefitted the real estate construction industry, has left us like a jilted lover. New to town, however, is Section 199A and she has a very different personality.
Former Section 199 (Domestic Production Deduction.)
Briefly, the former Section 199, which ended December 31, 2017, generally provided a 9% deduction based on the lesser of qualified production activities income or taxable income.1 The deduction was further limited to 50% of wages paid in connection with domestic production gross receipts.2
The former Section 199 was available for all taxpayers, including corporations. Specifically included were estates and trusts, and for owners of pass-through entities (partnerships and S Corporations) and for beneficiaries of estates and trusts (receiving distributions) attribution rules allowed the deduction to be passed out.
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Footnotes
- Section 199(a) of the Internal Revenue Code as effective through December 31, 2017. Under former Section 199(d)(2), for individuals, the term taxable income was substituted for adjusted gross income, determined after application of sections 86, 135, 137, 219, 221, 222 and 469.
- Section 199(b).
