Question

For the year 2013, Amber Corporation has taxable income of $880,000, alternative minimum taxable income of $600,000, and qualified production activities income (QPAI) of $640,000. The total W-2 wages paid to employees engaged in qualified domestic production activities are $116,000. Amber's DPAD for 2013 is:

Answer 1

Amber Corporation's Domestic Production Activities Deduction for 2013 is calculated by taking 9% of the Qualified Production Activities Income or 50% of W-2 wages, whichever is less. In this case, Amber's DPAD is $57,600 based on their provided figures.

Step-by-step explanation:

The Domestic Production Activities Deduction (DPAD) is calculated as follows:

1. First, calculate 9% of the lesser of Taxable Income or Qualified Production Activities Income (QPAI).
2. Second, calculate 50% of the total W-2 wages paid to employees engaged in qualified domestic production activities.
3. The DPAD is the lesser of the amounts from step 1 or step 2.

Given that Amber Corporation has a taxable income of $880,000, QPAI of $640,000, and total W-2 wages of $116,000 related to qualified production activities, the calculation is as follows:

• 9% of QPAI: 9% of $640,000 = $57,600
• 50% of W-2 wages: 50% of $116,000 = $58,000

The DPAD for Amber Corporation for the year 2013 is the lesser of the two values, which is $57,600.