Question

If qualified production activities income (QPAI) cannot be used in the calculation of the domestic production activities deduction in 2017 because of the taxable income limitation, the product of the amount not allowed multiplied by 9 percent can be carried over for 10 years.

True
False

Answer 1

The statement that the domestic production activities deduction can be carried over for 10 years if the QPAI is limited by taxable income is false; DPAD was not eligible for a carryover in 2017 and was also repealed by the TCJA for subsequent years.

Step-by-step explanation:

The statement regarding the carryover of the domestic production activities deduction (DPAD) if Qualified Production Activities Income (QPAI) is limited by taxable income is false. If a taxpayer's DPAD is limited by their taxable income, the unused portion of the deduction due to the limitation can not be carried forward to subsequent years.

According to the Internal Revenue Service (IRS) guidelines in effect for the tax year 2017, DPAD was a use-it-or-lose-it deduction for that year and could not be carried over to future years. The Tax Cuts and Jobs Act (TCJA) of 2017 repealed the DPAD for tax years beginning after December 31, 2017.