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McGraw-Hil Education Connect ing Started · imported From IE imported From Fire Domain ManageC ChespDomain.com Studen.oans.gow On Campus&On; h 9 HW Problems Help Save& E Chee Required information Problem 9-55 (LO 9-3) Pert 2 of 3 The following information applies to the questions displayed below) Renee manufactured and sold a "gadget a specialize domestiC production activities deduction enee incurred $16000 in direct expenses in the project which includes $3.200 of wages Renee paid to employees in the manufacturing of the gadget ed asset used by auto manufacturers that qualifies for the 69 What is Renee's domestic production activities deduction for the gadget in each of the following alternative scenarios? eBook References Problem 9-55 Part-b b. Renee sold the gadget for $29700 and she reported AGI of $8.400 before considering the manufecturing deduction 0 1 or 13 Next 6 8 BACK

Explanation / Answer

Domestic Production activity deduction in scenario B is as calculated below:

AGI should always be more than qualified income and the domestic production activity deduction should be less than the half of wages.

b. Particulars Amount ($) Gross Receipts 29,700 Less: Direct Expenses -16,000 Qualified production activity Income (a) 13,700 AGI 8,400 Required percentage (b) 9% Domestic production activity deduction (a*b) 756 AGI 8,400 Wages 3,200 Half of wages 1,600 Final Domestic production activity deduction 756

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