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In 2017, Loftis, Inc., a calendar year taxpayer, has QPAI of $4,500,000 and taxable income of...

In 2017, Loftis, Inc., a calendar year taxpayer, has QPAI of $4,500,000 and taxable income of $3,100,000. Because Loftis outsources much of its work to independent contractors, its W–2 wage base, which for Loftis is related entirely to production activities, is $214,000.

The DPAD for 2017 is_______ $.

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Answer #1

Calculation of DPAD for 2017

DPAD for 9% of adjusted gross income shall be taken

Adjusted Gross total Income = 3,100,000*9%

. =>$ 279000

Hence DPAD shall not exceed 50% of production activities = $ 214,000*50%

Therefore, DPAD = $ 107,000

Note: The condition to be satisfied for DPAD is the provision of qualified production activities income(QPAI), or adjusted gross income for an individual, estate, or trust for DPAD whichever is less then DPAD shall be 9% and in addition However, your DPAD generally cannot be more than 50% of the Form W-2 wages you paid to your employees.

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