The lower a taxpayer's W-2 wages,the less the potential DPAD amount.

Question

Quizplus · Accepted Answer

The DPAD (Domestic Production Activities Deduction) is based on a percentage of qualified production activities income (QPAI), which is typically calculated as a taxpayer's gross receipts from qualifying activities minus the cost of goods sold and other deductible expenses allocated to those activities. Since W-2 wages are an expense deduction that reduces QPAI, a lower amount of W-2 wages generally means a lower potential DPAD amount.

The Lower a Taxpayer's W-2 Wages,the Less the Potential DPAD