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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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a manufacturer that makes nail polish and bottles it and sells

Resolved Question:

a manufacturer that makes nail polish and bottles it and sells it per special orders, can he qualify for the domestic production credit? he has no out of the US processing. they mix the chemicals for the colors. they import the bottles and then do the writing on the bottles during the process. please refer me to something exact and not general, which i have already searched. the number is XXXXX large and i want to make sure i am perfectly correct if i take this.
Submitted: 8 years ago.
Category: Tax
Expert:  Ed Johnson replied 8 years ago.



You will not find in law or publications any reference to specific products, exept a few by way of example.


I know you would like the smoking gun determination.


Your industy would most likely be the same as perfumery, who take the credits now.


Can you give me your industry classification i.e. NAICS code.

Customer: replied 8 years ago.
we could not find anything that fit so we used 325900 as chemical related since there is quite a bit of chemical work in making the nail polish.
Expert:  Ed Johnson replied 8 years ago.



Thank you for getting back to me.


According to the IRS field guidance to examinating agents (auditors) this activy does in fact meet the requirements for domestic production.


As long as you are not reselling. Take a completed product and reselling it. Similar to perfumers, and other cosmetics's manufacturers, these are domestic production activities.


The field guide is listed here. The regualtion and the field guide are purposely non-specific except to name those activities that are not included. So as long as you are not reselling a product, then you can claim this.


As I previously stated, you will not find the exact words in text that specifically state manufacturing nail polish is eligible for the credits. The laws itself is general in and only specific to excluded activities.


See this guidance to the field agents:


Ed Johnson and 2 other Tax Specialists are ready to help you
Customer: replied 8 years ago.
thanks so much, the vagueness made me want to get a second opinion. it will produce a large number so i definitely did not want to be wrong. they are not resellers, they do the entire process from start to finish.

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