George operates a business that generated adjusted gross income of $250,000 and taxable income of $170,000 this year (before the domestic production activities deduction).Included in income was $70,000 of qualified production activities income.George paid $60,000 of wages to employees engaged in domestic manufacturing.What domestic production activities deduction will George be eligible to claim this year?
A) $5,400.
B) $6,300.
C) $7,200.
D) $15,300.
E) $22,500.

Question

Quizplus · Accepted Answer

The domestic production activities deduction (DPAD) is calculated as 9% of the lesser of qualified production activities income ($70,000) or taxable income ($170,000). Therefore, 9% of $70,000 is $6,300.

George Operates a Business That Generated Adjusted Gross Income of $250,000