Marsh Harbor Company manufactures fishing gear.Its taxable income in 2017 before the Qualifying Production Activities Deduction (QPAD)is $4,000,000 and its qualified production activities income is $3,500,000.Its qualifying W-2 wages paid are $300,000.How much may Marsh Harbour claim as its QPAD deduction in 2017?

Question

Quizplus · Accepted Answer

The QPAD deduction is the lesser of 9% of the qualified production activities income ($3,500,000 * 9% = $315,000) or 50% of the W-2 wages ($300,000 * 50% = $150,000). Therefore, the deduction is $150,000.

Marsh Harbor Company Manufactures Fishing Gear