Classifying Domestic Production Gross Receipts – Paul Gaulkin CPA

bar code saying made in usaDomestic production gross receipts are defined under Code Section 199(c)(4) to include gross receipts from the following sources:

1. Any sale, exchange or other disposition, or any lease, rental or license, of qualifying production property that was manufactured, produced, grown or extracted by the company in whole or in significant capacity within the United States. Usually qualifying production property includes tangible personal property, computer software, and sound recordings.

2. Any sale, exchange or disposition, or any lease, rental or license, of a qualified film produced by a company. Qualified film is considered any motion picture file or videotape if 50% or more of the total compensation relating to the production of the film is compensation for services performed in the United States by actors, production personnel, directors, and producers.

3. Any sale, exchange or disposition of electricity, natural gas, or potable water produced by the taxpayer in the United States.

4. Construction activities performed in the United States including activities directly related to the construction or substantial renovation of residential and commercial buildings and infrastructure.

5. Engineering or architectural services performed in the United States for construction projects located in the United States.

Limitations of DPGR

Domestic production gross receipts do not include the gross receipts of the taxpayer derived from:

1. The sale of food and beverages prepared by the taxpayer at a retail establishment.

2. The transmission or distribution of electricity, natural gas, or potable water.

3. Property leased, licensed, or rented by the taxpayer for use by a related person.

If you are unsure as to whether your specific situation qualifies for treatment under the domestic production gross receipts section of the code, you would be best advised to seek out a tax professional that can determine the proper classification of your activity.

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.


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