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Is the Section199 tax deduction available to a dentist who

will be fabricating dental appliances?...
Is the Section199 tax deduction available to a dentist who will be fabricating dental appliances?
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Answered in 1 hour by:
7/8/2017
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,361
Experience: Certified Public Accountant
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Hi, my name is Mark. I will be happy to help you with your question. IRC Section 199 was written to include a very broad definition of manufacturing. The product that is manufactured has to be tangible personal property. In other words, the patient needs to leave your office with a product. If the appliances are being manufactured by a 3rd party they would not qualify. Here is an article on the subject http://www.dentaleconomics.com/articles/print/volume-106/issue-10/money/are-you-a-manufacturer-for-purposes-of-section-199.html

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Customer reply replied 5 months ago
I now understand how the 9% deduction under Section 199 is calculated however am unclear as to whether the 9% deduction of the costs associates with the manufacturing activity is in addition to all of the other deductions an S Corp incurs. For example, an S Corp has gross receipts of 1 million & total expenses of 900,000. Is the 9% an additional 90,000 deduction?

The Domestic Production Activities Deduction is calculated on form 8903. This is completed by information that would be contained on the individual members or shareholders K-1's. The amount that is calculated on 8903 would flow to your individual 1040. The 9% would be in addition to the other deductions. There are additional limitations regarding wages and income.

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The amount would be 9% of the income. This would be an additional deduction.

Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,361
Experience: Certified Public Accountant
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