On Jan. 19, 2005, the Internal Revenue Service released some initial guidance to taxpayers for claiming the new manufacturing deduction available for the first time in 2005 with respect to qualified domestic manufacturing, production, growing and extraction activities.
Brought about by the American Jobs Creation Act of 2004 and phasing in from 2005 to 2010, the deduction will eventually equal 9 percent of qualified production activities income, or an effective reduction in the tax rate on such income of three percentage points for most businesses. For 2005, the deduction is 3 percent.
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