May Corporation manufactures and sells ceramic dinnerware. The company also sells dinnerware that is purchased from unrelated foreign producers. During the tax year 2011, May had a U.S. profit of $1.2 million (QPAI) and a profit from the imported merchandise of $100,000. What is May's DPAD?

Question

Quizplus · Accepted Answer

May Corporation can claim the DPAD (Domestic Production Activities Deduction) based on their QPAI (Qualified Production Activities Income), which is $1.2 million in this case. The maximum deduction allowed is 9% of QPAI.

9% of $1.2 million is $108,000, which is the DPAD for May Corporation. The profit from the imported merchandise does not qualify for the DPAD. Therefore, the correct answer is C.

May Corporation Manufactures and Sells Ceramic Dinnerware