Essay You are the tax director for ABC. You and your team have estimated that AB

Question

Essay

You are the tax director for ABC. You and your team have estimated that ABC can take an IRC Section 199 deduction of $300,000 in 2017. In calculating the amount of the deduction, you and your team have been aggressive in the interpretation of the costs that can be included in the deduction calculation. The aggressive items amount to $140,000 of the $300,000 deduction noted above. The tax benefit related to the aggressive portion of the deduction is $49,000.

The CFO of ABC wants to know if he can record tax benefit for the entire $49,000 in the financial statements. What is the process that you would go through to determine if ABC can book the benefit?

Explanation / Answer

Dear Friend,

In order to determine the amount of deduction to be claimed by the enterprise, We need to first look out the activity undertaken by the entity.

The following are the activities which are eligible for claiming the deduction under section 199.

Once if it is satisfied that the entity is covered under any of the above mentioned points, then we need to calculate the amount of deduction which is eligilble to be claimed by the entity.

Now let us see how to calculate the amount of deduction.

If all the above conditions and procedure is complied or followed, then the CFO of ABC can record and claim the entrie deduction of $ 300,000 in 2017.

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