For 2009, Denim Corporation has QPAI of $5 million, TI of $5.5 million, and W-2 wages of $200,000 allocable to domestic production gross receipts.Its PAD is:

Question

Quizplus · Accepted Answer

The Domestic Production Activities Deduction (PAD) is calculated as 9% of the lesser of QPAI ($5 million) or TI ($5.5 million), which is $5 million. Therefore, PAD is 9% of $5 million, which equals $450,000. However, it is limited to 50% of W-2 wages, which is $100,000. Hence, the PAD is $100,000.

For 2009, Denim Corporation Has QPAI of $5 Million, TI