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Section 199 — Time to Re-Evaluate Your Opportunities


The Section 199 deduction, first effective in 2005, provides an opportunity to reduce your organization's tax rate. The deduction has become even more significant now that the deduction rate is fully phased in at nine percent for tax years beginning after December 31, 2009.

Section 199 is a special deduction that applies to companies with domestic production activities, including those in manufacturing, software production, film production, print media, construction, engineering, power generation, and certain retail and hospitality industries.

The application and documentation requirements for the Section 199 deduction are challenging and time intensive. Furthermore, the IRS has designated the Section 199 Domestic Production Activity Deduction as a Tier 1 audit issue. Such designation has resulted in closer scrutiny of taxpayers that have claimed a Section 199 deduction on their federal tax return to determine whether they are in compliance with the substantiation and documentation requirements.

Whether undertaking Section 199 for the first time or refining a process already in place, Deloitte's Production Activities Solutions (PAS) group can help you address the needs of your organization in key areas related to the Section 199 deduction.

Download the PDF attachment to learn how our PAS group can assist with your Section 199 challenges.

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