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Don't paint yourself into a corner

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Q  You stated a while back that painters and landscapers may qualify for the manufacturing deduction. Is that always the case? D.M., via e-mail

A  No. Under final regulations issued in 2006, painters and landscapers may qualify for the Sec. 199 “manufacturing deduction,” but only if the activities are performed in conjunction with other activities constituting the erection or substantial renovation of real property. (Reg. 1.199-3(m)(2)(iii)) Therefore, not all painters and landscapers qualify.

Tip: For 2008, the Sec. 199 deduction is generally equal to 6% of qualified production activity income (QPAI).

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