861 by allocating 10% of the prior-period compensation costs to DPGR
and the remaining 90% to non-DPGR
In the case of a taxpayer engaged in the active conduct of a construction trade or business, DPGR
consists of gross receipts derived from construction of real property performed in the United States by the taxpayer in the ordinary course of such trade or business.
199-2(e)(1) wages that are properly allocable to DPGR
is determined on the basis of the proportion of DPGR
to total gross receipts.
As relevant here, DPGR
includes gross receipts derived from any lease, rental, license, sale, exchange, or other disposition of tangible personal property, computer software, and certain sound recordings that were produced by the taxpayer in whole or in significant part within the United States.
for customer use online will be treated as DPGR
if "another person" sells "substantially identical" software to its customers affixed to a tangible medium or via an Internet download.
199 purposes only include amounts properly allocable to DPGR
For purposes of calculating the fifty percent wage limitation, the term "W-2 wages" refers to the sum of the aggregate amount the taxpayer is required to include pursuant to Sections 6501(a)(3) and (8) on the W-2s for its employees that are allocable to DPGR
In treating the license fees as DPGR
, the taxpayer took the position that the composite package of media content offered to cable and satellite TV providers in an as-is condition (i.
In concept, once you know your DPGR
and QPAI, calculating the Section 199 deduction appears relatively simple.
include gross receipts from the lease, rental, license, sale, exchange, or other disposition of computer software (Sec.
QPA income equals DPGR
minus the sum of the cost of goods sold allocable to receipts and other expenses (other than the DPAD) that are properly allocable to DPGR
10) Under the new rules in the TIPRA amendments, amounts described in paragraphs (3) and (8) of section 6051(a) that are paid with respect to employment of employees need to be determined and any portion of that amount that is not allocated or apportioned to DPGR
to determine Qualified Production Activities Income (QPAI) (11) is excluded.