Pink,Inc.,a calendar year C corporation,manufactures golf gloves.For the current year,Pink had taxable income (before DPAD) of $900,000,qualified domestic production activities income of $750,000,and W-2 wages related to qualified production activities income of $140,000.Pink's domestic production activities deduction for the current year is:
A)$0.
B)$12,600.
C)$67,500.
D)$70,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Pink's DPAD is equal to 9% of the lesser of its taxable income or its qualified production activities income (QPAI). In this case, the lesser amount is $750,000, so 9% of that is $67,500. This amount cannot exceed 50% of the W-2 wages related to QPAI, which in this case is $70,000. However, since $67,500 is less than $70,000, the DPAD is limited to $67,500.

Pink,Inc,A Calendar Year C Corporation,manufactures Golf Gloves