8903 D omestic Production Activities Deduction

2007 Form 8903, Domestic Production Activities Deduction

Purpose: This is the first circulated draft of the 2007 Form 8903 for your review
and comments. See below for a discussion of the major changes.
TPCC Meeting: None scheduled, but may be arranged if requested.
Prior Version: The 2006 Form 8903 is available at:
http://www.irs.gov/pub/irs-pdf/f8903.pdf.
Other Products: Circulations of draft tax forms, instructions, notices, and
publications are posted at:
http://taxforms.web.irs.gov/draft_products.html.
Comments: Please email, fax, call, or mail any comments by June 21, 2007.
Comments should also be sent to the reviewer at [email protected].

David L. Lupi-Sher
Tax Forms and Publications
SE:W:CAR:MP:T:B:C
Email: [email protected]
Phone: 202-622-3878

Major Changes to 2007 Form 8903

Line 3. At the request of CC:INTL, we changed the wording from "deductions and losses
definitely related to DPGR" to "deductions and losses directly allocable to DPGR."
In addition, we made the following changes:
•
•

Dropped the references to “estates and trusts, see instructions” as all estates and
trusts will use line 3 regardless of whether they use the section 861 method or
simplified deduction method.
Replaced “skip line 3” with “see instructions” as line 3 will be used for both the
861 and simplified deduction methods.

Line 4. At the request of CC: INTL, we removed references to the section 861 method.
We modified line 4 to be used only for the small business simplified overall method.
Line 7. CC:PSI expressed concerns that filers of Form 8903 might enter K-1 amounts on
line 7 without any necessary adjustments for disallowed losses. In response, we deleted

the list of K-1 references and replaced the text with "Qualified production activities
income from certain partnerships, S corporations, estates, and trusts (see instructions)."
We will clarify the correct reporting for line 7 in the instructions.
Line 8. We added new line 8 to calculate total QPAI from lines 6 and 7, and to direct
estates and trusts to complete line 9 if necessary.
Line 9. We added new line 9 for estates and trusts to reduce their QPAI by the amount of
QPAI allocated to beneficiaries and inserted the text, "Amount allocated to beneficiaries
of the estate or trust (see instructions)." This change more accurately reflects the
calculation of QPAI by estates and trusts under Reg. Section 1.199-9(e).
Line 10. We deleted “Add lines 6 and 7” and added, “Estates and trusts, subtract line 9
from line 8, all others, enter amount from line 8.” This additional calculation is required
by estates and trusts under Reg. Section 1.199-9(e).
Line 13. We updated the percentage limitation of the lesser of QPAI or income from
three (3) to six (6) percent pursuant to section 199(a)(2).
Line 15. We deleted the list of K-1 references and replaced the text with “W-2 wages
from certain partnerships, S corporations, estates, and trusts (see instructions)” to be
consistent with the changes to line 7. We will clarify the correct reporting for line 15 in
the instructions.
Line 16. We renumbered the line references to state, “Add lines 14 and 15,” and added
“Estates and trusts, go to line 17, all others, skip line 17 and go to line 18.”
Line 17. We added line 17 for estates and trusts to reduce their W-2 wages by the amount
allocated to beneficiaries and added the text “Amount allocated to beneficiaries of the
estate or trust (see instructions).” This change more accurately reflects the calculation of
QPAI by estates and trusts under Reg. Section 1.199-9(e).
Line 18. We added line 18 and the text, “Estates and trusts, subtract line 17 from line 16,
all others, enter amount from line 16.” This additional calculation is required for estates
and trusts under Reg. Section 1.199-9(e).
Line 23. We deleted the reference to Form 1120-A, line 21, as the Form 1120-A is
obsolete for tax year 2007 and later.

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I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 8903, PAGE 1 OF 2 (PAGE 2 IS BLANK)
MARGINS; TOP 13mm (1/2"), CENTER SIDES. PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (8-1/2") x 279mm (11")
PERFORATE: None
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

8903

Department of the Treasury
Internal Revenue Service

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Date

O.K. to print
Revised proofs
requested

Domestic Production Activities Deduction
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2007

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Attach to your tax return.

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Attachment
Sequence No.

See separate instructions.

Domestic production gross receipts (DPGR)
Allocable cost of goods sold. If you are using the small business
simplified overall method, skip lines 2 and 3
If you are using the section 861 method, enter deductions and
losses allocable to DPGR. All others, see instructions

If you are using the small business simplified overall method, enter
the amount of cost of goods sold and other deductions or losses
you ratably apportion to DPGR. All others, skip line 4

1

2

3

4

5

Add lines 2 through 4

6

Subtract line 5 from line 1

7

Qualified production activities income from partnerships, S corporations, estates, and trusts
(see instructions)

7

Add lines 6 and 7. Estates and trusts, go to line 9, all others, skip line 9 and go to line 10
Amount allocated to beneficiaries of the estate or trust (see instructions)

8
9

Qualified production activities income. Estates and trusts, subtract line 9 from line 8, all
others, enter amount from line 8. If zero or less, enter -0- here, skip lines 11 through 19,
and enter -0- on line 20

10

6

certain

10

11

Income limitation (see instructions):
● Individuals, estates, and trusts. Enter your adjusted gross income figured without the
domestic production activities deduction
● All others. Enter your taxable income figured without the domestic production
activities deduction (tax-exempt organizations, see instructions)

12

143

Identifying number

5

8
9

Signature

OMB No. 1545-1984

Name(s) as shown on return

1
2

Action

%

11

Enter the smaller of line 10 or line 11. If zero or less, enter -0- here, skip lines 13 through
19, and enter -0- on line 20

12

13

Enter 6% of line 12

13

14

Form W-2 wages (see instructions)
certain

14

15
16

15

17

Form W-2 wages from partnerships, S corporations, estates, and trusts (see instructions)
Add lines 14 and 15. Estates and trusts, go to line 17, all others, skip line 17 and go to line
18
Amount allocated to beneficiaries of the estate or trust (see instructions)

18

Estates and trusts, subtract line 17 from line 16, all others, enter amount from line 16

18

19

Form W-2 wage limitation. Enter 50% of line 18

19

20

Enter the smaller of line 13 or line 19

20

21

Domestic production activities deduction from cooperatives. Enter deduction from
Form 1099-PATR, box 6

21

22

Expanded affiliated group allocation (see instructions)

22

23

Domestic production activities deduction. Combine lines 20 through 22 and enter the result
here and on Form 1040, line 35; Form 1120, line 25; or the applicable line of your return

For Paperwork Reduction Act Notice, see separate instructions.

Printed on Recycled Paper

Cat. No. 37712F

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Form

8903

(2007)