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Posted by Harlan Lunsford on January 26, 2007, 4:42 am
Please log in for more thread options Paul Thomas, CPA wrote:
>> Paul Thomas, CPA wrote:
>>>> Our company is a manufacturer of printing products such as
>>>> business card and all of our plants are in the US. I joined
>>>> a CPE seminar last week and I found the section 199
>>>> regarding the domestic production deduction.
>>>>
>>>> Could anybody let me know if our company will qualify the
>>>> sec. 199 and the deduction? Thanks so much.
>>> It sounds like you will have - or may have - split income,
>>> from manufacturing as well as services. Much like McDonalds
>>> isn't manufacturing hamburgers for it's customers, it's hard
>>> to look at printing business cards as a manufacturing
>>> activity. That being said, there probably are many products
>>> you do manufacture, even if they have additional service
>>> processing like specialty printing, so segregating the
>>> income by source could generate some tax break. Starbucks
>>> would have to do this, if they manufacture their own beans
>>> and grind for sale, as well as sell brewed coffee (a
>>> service).
>>>
>>> This is new enough that you'll have to make a lot of
>>> judgment calls and tweak it along the line as you hear of
>>> regulations and court cases that favor you, as well as those
>>> that do not.
>> Now what kind of "services" would a printing manufacturer
>> provide that are not built into the price of the products
>> sold? Unless the company also provides design services I
>> would say all activities are domestic production activities.
>>
>> A similar question came up elsewhere, the questioner wanting
>> to know whether or not to send a 1099-misc to the printer
>> since what he bought were "custom" printed. One factor I
>> mentioned there and perhaps would pertain here is whether or
>> not sales tax is applied on all invoices.
> Are you implying that the retail store in the mall, that
> will custom embroider the shirt you pull from the rack is a
> manufacturer for the credit?
Nope. Because the shirt is already manufacturer and this
embroidering is a service. Although I just bet you store
will charge sales tax on it; and everything of course.
> Kinkos doesn't qualify for the manufacturing credit on a
> huge part of their income. But there may be something they
> do that qualifies as domestic manufacturing. The
> applicability of sales tax to the bill is not any indication
> of a manufacturing activity.
We agree then, to disagree. Sales tax being charged is not
THE only indicator I admit, but one factor in several
perhaps.
ChEAr$,
Harlan
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