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Build your case for a manufacturing deduction

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in Small Business Tax

Q We’re a construction company that specializes in fire- and water-damaged homes. Typical jobs consist of gutting residential homes and rebuilding. Our accountant told us that we wouldn’t qualify for the new manufacturing deduction because it applies only to new construction. Do you agree? L.S., Cincinnati

A Not necessarily. Plenty of confusion still surrounds the application of the new Section 199 “manufacturing” deduction, but the deduction isn’t strictly limited to new construction. For this deduction, construction activities include new construction or substantial restoration of real property performed in the United States. Real property consists of residential or commercial buildings, permanent structures, permanent land improvements and infrastructure (e.g., roads, sewers, sidewalks and power lines). Certain technical requirements must be met. We suggest that you seek

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