1. Draw up a blueprint for manufacturing deductions
For the 2006 tax year, your business may be able to claim a Section 199 manufacturing deduction equal to 3 percent of the taxable income from its qualified production activities. (The deduction is scheduled to increase to 6 percent in 2007 and then to 9 percent in 2010.)
The annual deduction is limited to 50 percent of the W-2 wages paid during the tax year.
New rules issued earlier this year expand the deduction’s parameters. Example: It’s now easier to qualify for a manufacturing deduction if you engage in construction activities (see 7/24/06 issue).
Strategy: Try to wriggle under the definition of a “manufacturing” operation. Your tax pro can help you meet all the technical requirements in the law.
For instance, your ...(register to read more)
To read the rest of this article you must first register with your email address.
