Source: http://www.law.cornell.edu/uscode/text/26/199?quicktabs_8=0
Timestamp: 2014-10-20 09:49:28
Document Index: 669583121

Matched Legal Cases: ['§ 199', '§ 102', '§ 403', '§ 514', '§ 401', '§ 401', '§ 312', '§ 502', '§ 746', '§ 318', '§ 2', '§ 502', '§ 502', '§ 502', '§ 401', '§ 312', '§ 401', '§ 514', '§ 514', '§ 514', '§ 403', '§ 403', '§ 403', '§ 403', '§ 403', '§ 403', '§ 403', '§ 403', '§ 403', '§ 403', '§ 403', '§ 403', '§ 403', '§ 403', '§ 318', '§ 746', '§ 401', '§ 312', '§ 401', '§ 514']

26 U.S. Code § 199 - Income attributable to domestic production activities | LII / Legal Information Institute
In general There shall be allowed as a deduction an amount equal to 9 percent of the lesser of—
Phasein In the case of any taxable year beginning after 2004 and before 2010, paragraph (1) shall be applied by substituting for the percentage contained therein the transition percentage determined under the following table:
3 2007, 2008, or 2009
Deduction limited to wages paid (1)
In general The amount of the deduction allowable under subsection (a) for any taxable year shall not exceed 50 percent of the W–2 wages of the taxpayer for the taxable year.
W–2 wages For purposes of this section—
In general The term “W–2 wages” means, with respect to any person for any taxable year of such person, the sum of the amounts described in paragraphs (3) and (8) of section 6051
(a) paid by such person with respect to employment of employees by such person during the calendar year ending during such taxable year.
Limitation to wages attributable to domestic production Such term shall not include any amount which is not properly allocable to domestic production gross receipts for purposes of subsection (c)(1).
Return requirement Such term shall not include any amount which is not properly included in a return filed with the Social Security Administration on or before the 60th day after the due date (including extensions) for such return.
Special rule for qualified film In the case of a qualified film, such term shall include compensation for services performed in the United States by actors, production personnel, directors, and producers.
Acquisitions and dispositions The Secretary shall provide for the application of this subsection in cases where the taxpayer acquires, or disposes of, the major portion of a trade or business or the major portion of a separate unit of a trade or business during the taxable year.
Qualified production activities income For purposes of this section—
In general The term “qualified production activities income” for any taxable year means an amount equal to the excess (if any) of—
Allocation method The Secretary shall prescribe rules for the proper allocation of items described in paragraph (1) for purposes of determining qualified production activities income. Such rules shall provide for the proper allocation of items whether or not such items are directly allocable to domestic production gross receipts.
Special rules for determining costs (A)
In general For purposes of determining costs under clause (i) of paragraph (1)(B), any item or service brought into the United States shall be treated as acquired by purchase, and its cost shall be treated as not less than its value immediately after it entered the United States. A similar rule shall apply in determining the adjusted basis of leased or rented property where the lease or rental gives rise to domestic production gross receipts.
Exports for further manufacture In the case of any property described in subparagraph (A) that had been exported by the taxpayer for further manufacture, the increase in cost or adjusted basis under subparagraph (A) shall not exceed the difference between the value of the property when exported and the value of the property when brought back into the United States after the further manufacture.
Domestic production gross receipts (A)
In general The term “domestic production gross receipts” means the gross receipts of the taxpayer which are derived from—
any lease, rental, license, sale, exchange, or other disposition of—
Exceptions Such term shall not include gross receipts of the taxpayer which are derived from—
Special rule for certain Government contracts Gross receipts derived from the manufacture or production of any property described in subparagraph (A)(i)(I) shall be treated as meeting the requirements of subparagraph (A)(i) if—
Partnerships owned by expanded affiliated groups For purposes of this paragraph, if all of the interests in the capital and profits of a partnership are owned by members of a single expanded affiliated group at all times during the taxable year of such partnership, the partnership and all members of such group shall be treated as a single taxpayer during such period.
Qualifying production property The term “qualifying production property” means—
any property described in section 168
Qualified film The term “qualified film” means any property described in section 168
(f)(3) if not less than 50 percent of the total compensation relating to the production of such property is compensation for services performed in the United States by actors, production personnel, directors, and producers. Such term does not include property with respect to which records are required to be maintained under section 2257 of title 18, United States Code. A qualified film shall include any copyrights, trademarks, or other intangibles with respect to such film. The methods and means of distributing a qualified film shall not affect the availability of the deduction under this section.
In general The term “domestic production gross receipts” shall not include any gross receipts of the taxpayer derived from property leased, licensed, or rented by the taxpayer for use by any related person.
Related person For purposes of subparagraph (A), a person shall be treated as related to another person if such persons are treated as a single employer under subsection (a) or (b) ofsection 52 or subsection (m) or (o) ofsection 414, except that determinations under subsections (a) and (b) ofsection 52 shall be made without regard to section 1563
Application of section to pass-thru entities (A)
Partnerships and S corporations In the case of a partnership or S corporation—
in the case of each partner of a partnership, or shareholder of an S corporation, who owns (directly or indirectly) at least 20 percent of the capital interests in such partnership or of the stock of such S corporation—
Trusts and estates In the case of a trust or estate—
for purposes of paragraph (2), adjusted gross income of the trust or estate shall be determined as provided in section 67
(e) with the adjustments described in such paragraph.
Regulations The Secretary may prescribe rules requiring or restricting the allocation of items and wages under this paragraph and may prescribe such reporting requirements as the Secretary determines appropriate.
Application to individuals In the case of an individual, subsections (a)(1)(B) and (d)(9)(A)(iii) shall be applied by substituting “adjusted gross income” for “taxable income”. For purposes of the preceding sentence, adjusted gross income shall be determined—
Agricultural and horticultural cooperatives (A)
Deduction allowed to patrons Any person who receives a qualified payment from a specified agricultural or horticultural cooperative shall be allowed for the taxable year in which such payment is received a deduction under subsection (a) equal to the portion of the deduction allowed under subsection (a) to such cooperative which is—
identified by such cooperative in a written notice mailed to such person during the payment period described in section 1382
Cooperative denied deduction for portion of qualified payments The taxable income of a specified agricultural or horticultural cooperative shall not be reduced under section 1382 by reason of that portion of any qualified payment as does not exceed the deduction allowable under subparagraph (A) with respect to such payment.
Taxable income of cooperatives determined without regard to certain deductions For purposes of this section, the taxable income of a specified agricultural or horticultural cooperative shall be computed without regard to any deduction allowable under subsection (b) or (c) ofsection 1382 (relating to patronage dividends, per-unit retain allocations, and nonpatronage distributions).
Special rule for marketing cooperatives For purposes of this section, a specified agricultural or horticultural cooperative described in subparagraph (F)(ii) shall be treated as having manufactured, produced, grown, or extracted in whole or significant part any qualifying production property marketed by the organization which its patrons have so manufactured, produced, grown, or extracted.
Qualified payment For purposes of this paragraph, the term “qualified payment” means, with respect to any person, any amount which—
is described in paragraph (1) or (3) of section 1385
Specified agricultural or horticultural cooperative For purposes of this paragraph, the term “specified agricultural or horticultural cooperative” means an organization to which part I of subchapter T applies which is engaged—
Special rule for affiliated groups (A)
In general All members of an expanded affiliated group shall be treated as a single corporation for purposes of this section.
Expanded affiliated group For purposes of this section, the term “expanded affiliated group” means an affiliated group as defined in section 1504
(a), determined—
without regard to paragraphs (2) and (4) of section 1504
Allocation of deduction Except as provided in regulations, the deduction under subsection (a) shall be allocated among the members of the expanded affiliated group in proportion to each member’s respective amount (if any) of qualified production activities income.
Trade or business requirement This section shall be applied by only taking into account items which are attributable to the actual conduct of a trade or business.
Coordination with minimum tax For purposes of determining alternative minimum taxable income under section 55—
in the case of a corporation, subsection (a)(1)(B) shall be applied by substituting “alternative minimum taxable income” for “taxable income”.
Unrelated business taxable income For purposes of determining the tax imposed by section 511,subsection (a)(1)(B) shall be applied by substituting “unrelated business taxable income” for “taxable income”.
Treatment of activities in Puerto Rico (A)
In general In the case of any taxpayer with gross receipts for any taxable year from sources within the Commonwealth of Puerto Rico, if all of such receipts are taxable under section 1 or 11 for such taxable year, then for purposes of determining the domestic production gross receipts of such taxpayer for such taxable year under subsection (c)(4), the term “United States” shall include the Commonwealth of Puerto Rico.
Special rule for applying wage limitation In the case of any taxpayer described in subparagraph (A), for purposes of applying the limitation under subsection (b) for any taxable year, the determination of W–2 wages of such taxpayer shall be made without regard to any exclusion under section 3401
(a)(8) for remuneration paid for services performed in Puerto Rico.
Termination This paragraph shall apply only with respect to the first 8 taxable years of the taxpayer beginning after December 31, 2005, and before January 1, 2014.
Special rule for taxpayers with oil related qualified production activities income (A)
In general If a taxpayer has oil related qualified production activities income for any taxable year beginning after 2009, the amount otherwise allowable as a deduction under subsection (a) shall be reduced by 3 percent of the least of—
Oil related qualified production activities income For purposes of this paragraph, the term “oil related qualified production activities income” means for any taxable year the qualified production activities income which is attributable to the production, refining, processing, transportation, or distribution of oil, gas, or any primary product thereof during such taxable year.
Primary product For purposes of this paragraph, the term “primary product” has the same meaning as when used in section 927
(a)(2)(C), as in effect before its repeal.
Regulations The Secretary shall prescribe such regulations as are necessary to carry out the purposes of this section, including regulations which prevent more than 1 taxpayer from being allowed a deduction under this section with respect to any activity described in subsection (c)(4)(A)(i).
(Added Pub. L. 108–357, title I, § 102(a),Oct. 22, 2004, 118 Stat. 1424; amended Pub. L. 109–135, title IV, § 403(a)(1)–(13), Dec. 21, 2005, 119 Stat. 2615–2619; Pub. L. 109–222, title V, § 514(a), (b),May 17, 2006, 120 Stat. 366; Pub. L. 109–432, div. A, title IV, § 401(a),Dec. 20, 2006, 120 Stat. 2953; Pub. L. 110–343, div. B, title IV, § 401(a), (b), div. C, title III, § 312(a), title V, § 502(c),Oct. 3, 2008, 122 Stat. 3851, 3869, 3876; Pub. L. 111–312, title VII, § 746(a),Dec. 17, 2010, 124 Stat. 3319; Pub. L. 112–240, title III, § 318(a),Jan. 2, 2013, 126 Stat. 2331.)
(a)(2)(C) of this title, referred to in subsec. (d)(9)(C), was repealed by Pub. L. 106–519, § 2,Nov. 15, 2000, 114 Stat. 2423.
2013—Subsec. (d)(8)(C). Pub. L. 112–240substituted “first 8 taxable years” for “first 6 taxable years” and “January 1, 2014” for “January 1, 2012”.
2010—Subsec. (d)(8)(C). Pub. L. 111–312substituted “first 6 taxable years” for “first 4 taxable years” and “January 1, 2012” for “January 1, 2010”.
2008—Subsec. (b)(2)(D). Pub. L. 110–343, § 502(c)(1), added subpar. (D).
Subsec. (c)(6). Pub. L. 110–343, § 502(c)(2), inserted at end “A qualified film shall include any copyrights, trademarks, or other intangibles with respect to such film. The methods and means of distributing a qualified film shall not affect the availability of the deduction under this section.”
Subsec. (d)(1)(A)(iv). Pub. L. 110–343, § 502(c)(3), added cl. (iv).
Subsec. (d)(2). Pub. L. 110–343, § 401(b), substituted “subsections (a)(1)(B) and (d)(9)(A)(iii)” for “subsection (a)(1)(B)” in introductory provisions.
Subsec. (d)(8)(C). Pub. L. 110–343, § 312(a), substituted “first 4 taxable years” for “first 2 taxable years” and “January 1, 2010” for “January 1, 2008”.
Subsec. (d)(9), (10). Pub. L. 110–343, § 401(a), added par. (9) and redesignated former par. (9) as (10).
2006—Subsec. (a)(2). Pub. L. 109–222, § 514(b)(2), struck out “and subsection (d)(1)” after “paragraph (1)”.
Subsec. (b)(2). Pub. L. 109–222, § 514(a), amended par. (2) generally. Prior to amendment, text read as follows: “For purposes of this section, the term ‘W–2 wages’ means, with respect to any person for any taxable year of such person, the sum of the amounts described in paragraphs (3) and (8) of section 6051
(a) paid by such person with respect to employment of employees by such person during the calendar year ending during such taxable year. Such term shall not include any amount which is not properly included in a return filed with the Social Security Administration on or before the 60th day after the due date (including extensions) for such return.”
Subsec. (d)(1)(A)(iii). Pub. L. 109–222, § 514(b)(1), amended cl. (iii) generally. Prior to amendment, cl. (iii) read as follows: “each partner or shareholder shall be treated for purposes of subsection (b) as having W–2 wages for the taxable year in an amount equal to the lesser of—
Subsec. (d)(8), (9). Pub. L. 109–432added par. (8) and redesignated former par. (8) as (9).
2005—Subsec. (a)(2). Pub. L. 109–135, § 403(a)(11)(B), substituted “subsection (d)(1)” for “subsections (d)(1) and (d)(6)”.
Subsec. (b)(1). Pub. L. 109–135, § 403(a)(1), substituted “the taxpayer” for “the employer”.
Subsec. (b)(2). Pub. L. 109–135, § 403(a)(2), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “For purposes of paragraph (1), the term ‘W–2 wages’ means the sum of the aggregate amounts the taxpayer is required to include on statements under paragraphs (3) and (8) of section 6051
(a) with respect to employment of employees of the taxpayer during the calendar year ending during the taxpayer’s taxable year.”
Subsec. (c)(1)(B). Pub. L. 109–135, § 403(a)(3), inserted “and” at end of cl. (i), added cl. (ii), and struck out former cls. (ii) and (iii) which read as follows:
Subsec. (c)(2). Pub. L. 109–135, § 403(a)(4), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “The Secretary shall prescribe rules for the proper allocation of items of income, deduction, expense, and loss for purposes of determining income attributable to domestic production activities.”
Subsec. (c)(4)(A)(ii), (iii). Pub. L. 109–135, § 403(a)(5), added cls. (ii) and (iii) and struck out former cls. (ii) and (iii) which read as follows:
Subsec. (c)(4)(B)(iii). Pub. L. 109–135, § 403(a)(6), added cl. (iii).
Subsec. (c)(4)(C), (D). Pub. L. 109–135, § 403(a)(7), added subpars. (C) and (D).
Subsec. (d)(1). Pub. L. 109–135, § 403(a)(8), reenacted heading without change and amended text generally. Prior to amendment, text consisted of subpars. (A) and (B) relating to general application of section to pass-thru entities and application of wage limitation.
Subsec. (d)(3). Pub. L. 109–135, § 403(a)(9), amended heading and text of par. (3) generally. Prior to amendment, text related to deductions allowed to patrons of agricultural and horticultural cooperatives.
Subsec. (d)(4)(B)(i). Pub. L. 109–135, § 403(a)(10), substituted “more than 50 percent” for “50 percent” and “at least 80 percent” for “80 percent”.
Subsec. (d)(6). Pub. L. 109–135, § 403(a)(11)(A), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “The deduction under this section shall be allowed for purposes of the tax imposed by section 55; except that for purposes of section 55, the deduction under subsection (a) shall be 9 percent of the lesser of—
Subsec. (d)(7). Pub. L. 109–135, § 403(a)(12), added par. (7). Former par. (7) redesignated (8).
Subsec. (d)(8). Pub. L. 109–135, § 403(a)(12), (13), redesignated par. (7) as (8) and inserted before period at end “, including regulations which prevent more than 1 taxpayer from being allowed a deduction under this section with respect to any activity described in subsection (c)(4)(A)(i)”.
Pub. L. 112–240, title III, § 318(b),Jan. 2, 2013, 126 Stat. 2331, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2011.”
Pub. L. 111–312, title VII, § 746(b),Dec. 17, 2010, 124 Stat. 3320, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2009.”
Pub. L. 110–343, div. B, title IV, § 401(c),Oct. 3, 2008, 122 Stat. 3851, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2008.”
Pub. L. 110–343, div. C, title III, § 312(b),Oct. 3, 2008, 122 Stat. 3869, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2007.”
Amendment by section 502(c) ofPub. L. 110–343applicable to taxable years beginning after Dec. 31, 2007, see section 502(e)(2) ofPub. L. 110–343, set out as a note under section 181 of this title.
Pub. L. 109–432, div. A, title IV, § 401(b),Dec. 20, 2006, 120 Stat. 2953, provided that: “The amendments made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 2005.”
Pub. L. 109–222, title V, § 514(c),May 17, 2006, 120 Stat. 367, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [May 17, 2006].”
Section applicable to taxable years beginning after Dec. 31, 2004, subject to transition rule, see section 102(e) ofPub. L. 108–357, as amended, set out as an Effective Date of 2004 Amendments note under section 56 of this title.