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Form 06-003 - Calculation Of The Domestic Production Activities Deduction For Lousiana Corporation Income Tax Purpose Page 3

The domestic production activities deduction attributed to income not subject to

Louisiana income tax shall not be allowed as a deduction.

Example:

Following IRS Regulations The Jay Frost Corporation has been allocated $10,000 of

domestic production activities deduction. The Jay Frost Corporation has two major

sources of income. The construction division contributed $150,000 of QPAI to the

expanded affiliated groups’ domestic production activities deduction, while the oil and

gas production division contributed an additional $150,000 of QPAI.

Step 1. The federal basis QPAI of the corporation will be segregated into QPAI that is

allocable income, QPAI that is apportionable income and QPAI that is not subject to

Louisiana income tax:

Allocable QPAI

Apportionable QPAI

QPAI not Taxed by LA

$150,000

-0-

Step 2. The domestic production activities deduction will be attributed to each

classification to the extent of the ratio of each classification’s QPAI to total QPAI for all

classifications.

Allocable QPAI

Apportionable QPAI

QPAI not Taxed by LA

$150,000

-0-

Ratio

.50

QPAI

$ 5,000

The Jay Frost Corporation is allowed to include $5,000 as a deduction in computing total

allocable income and $5,000 as a deduction computing apportionable income.

Cynthia Bridges

Secretary

By:

Nina S. Hunter, Attorney

Policy Services Division

A Revenue Ruling is issued under the authority of LAC 61III.101 (C). A Revenue Ruling is written to

provide guidance to the public and to Department of Revenue employees. It is a written statement issued to

apply principles of law to a specific set of facts. A Revenue Ruling does not have the force and effect of

law and is not binding on the public. It is a statement of the department's position and is binding on the

department until superseded or modified by a subsequent change in statute, regulation, declaratory ruling,

or court decision.

Form 06-003 - Calculation Of The Domestic Production Activities Deduction For Lousiana Corporation Income Tax Purpose Page 3