40.23 Overview of the Domestic Production Activities Deduction
The domestic production activities deduction (also referred to as the “manufacturer’s deduction”) encourages manufacturing and other production activities in the United States. The deduction is a fixed percentage of income from qualified production activities or adjusted gross income, whichever is lower.
The percentage for 2012 is 9%.
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Caution
Domestic Production Activities Deduction and NOLs
The domestic production activities deduction (40.23) cannot create or increase an NOL carryback or carryforward (with very limited exceptions).
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Reporting the deduction.
The deduction is figured on Form 8903. It is entered on Line 35 of Form 1040.
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