Looking for a Louisiana Tax Forms And Templates? Download it for free!

Form 06-003 - Calculation Of The Domestic Production Activities Deduction For Lousiana Corporation Income Tax Purpose

Revenue Ruling

No. 06-003

May 10, 2006

Corporation Income and Franchise Taxes

Calculation of the Domestic Production Activities Deduction for

Louisiana Corporation Income Tax Purposes

Purpose

The primary purpose of this Revenue Ruling is to provide guidance to Revenue

employees and taxpayers in calculating the IRC §199 Domestic Production Activities

Deduction for Louisiana corporation income tax purposes.

Discussion

On October 22, 2004, President Bush signed into law the American Jobs Creation Act

which included a tax benefit for certain domestic production activities. The deduction is

calculated by first taking the qualified production activity gross receipts and then

reducing them by the cost of goods sold, direct expenses and a portion of indirect

expenses. This amount is the taxpayer’s qualified production activity income. The

deduction is equal to the lesser of the taxable income derived from a qualified production

activity or the taxable income for the taxable year multiplied by the applicable

percentages. The applicable percentage for 2005 and 2006 is 3 percent. The percentage

increases to 6 percent in 2006 through 2009 and nine percent in 2010 and after. The

following activities are qualified production activities:

1. The manufacture, production, growth or extraction in whole or significant part

in the United States of tangible personal property, software development or

music recordings;

2. Film production, provided at least 50 percent of the total compensation

relating to the production services were performed in the United States;

3. Construction or substantial renovation of real property in the United States

including residential property and commercial buildings and infrastructure;

4. Production of electricity, natural gas or water in the United States; or

5. Engineering and architectural services performed in the United States and

related construction to real property.

Additionally, the deduction is limited to fifty percent of the W-2 wages paid by the

taxpayer during the calendar year that ends in such taxable year.

Section 199 also provides that all members of an expanded affiliated group are treated as

a single corporation for section 199 purposes. An expanded affiliated group for section

Form 06-003 - Calculation Of The Domestic Production Activities Deduction For Lousiana Corporation Income Tax Purpose