CCA 201138047: Domestic production receipts and income are partnership items

Plain-English summary

Chief Counsel Advice addressed how the domestic production deduction rules apply to a partnership. It stated that domestic production activity gross receipts and the resulting gross income are partnership items determined at the partnership level. The advice characterized the deduction under IRC § 199 as an affected item because it cannot be computed without considering all of a partner's income for the taxable year. This distinction determines which items are handled at the partnership level and which depend on the partner's individual return.

Ruling snapshot

• Question: Which parts of the domestic production deduction calculation are partnership items and which are affected items?
• Outcome: advice given
• Key authorities: IRC §§ 199(a)(1)(B) and 6231

Full text (IRS public release)

ID: CCA_2011090910204337 Number: 201138047
Release Date: 9/23/2011
Office: ----------
UILC: 6231.03-00, 199.01-00

From: -------------------
Sent: Friday, September 09, 2011 10:20:45 AM
To: --------------------
Cc: --------------------------------------------------------------------------------------------------------------------------
Subject: RE: Domestic Production Deduction IRC 199

Both the Domestic Production Activity Gross Receipts and the resulting gross income
from such activity (IRC 199)is a partnership item determined at the partnership level. The
-- percent deduction is an affected item since it cannot be computed without reference to
all of a partner's income for the taxable year under section 199(a)(1)(B).