No Sec. 199 deduction for these activities


The IRS Large Business & International (LB&I) Division issued guidance to its employees in memo LB&I-04-0315-001 listing activities performed “at the retail level” that it said do not produce property that is “manufactured, produced, grown, or extracted” (MPGE), as defined by Regs. Sec. 1.199-3(e), in whole or significant part in the United States that could qualify for the domestic production deduction of Sec. 199. They are:

  • Cutting blank keys to a customer’s specification;
  • Mixing base paint and a paint coloring agent;
  • Applying garnishments to cake that is not baked where sold;
  • Applying gas to agricultural products to slow or expedite fruit ripening;
  • Storing agricultural products in a controlled environment to extend shelf life; and
  • Maintaining plants and seedlings.

Other similar activities may also be non-MPGE, depending on the facts and circumstances, the memo stated.

SPONSORED REPORT

Keeping client information safe in an age of scams and security threats

A look at the Dirty Dozen tax scams and ways to protect taxpayer information.

TECHNOLOGY Q&A

How to create maps in Excel 2016

Microsoft Excel 2016 has two new mapping capabilities. J. Carlton Collins, CPA, demonstrates how to make masterful 2D and 3D maps in Excel 2016.

QUIZ

News quiz: IRS enforcement, a hot job, and audit value

The IRS’s 2016 Data Book, a “hot job” of particular interest at this time of year, and insight into how executive and audit committees view the insights from financial statement audits received attention recently. See how much you know with this short quiz.