Which of the Following Is True Regarding the Qualified Production

question 22

Multiple Choice

Which of the following is true regarding the Qualified Production Activities Deduction (QPAD) ?
I.The QPAD deduction is limited to 9% of the lessor of taxable income before the QPAD deduction or qualified production activities income
II.The QPAD deduction cannot exceed 50% of W-2 wages allocated to QPAD activities.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Depreciation

Allocating the price of a physical asset systematically over the duration of its effective life.

Plant Assets

Long-term tangible assets used in the operation of a business that are expected to provide benefits for more than one year, such as machinery and buildings.

Computing Depreciation

The process of systematically allocating the cost of a tangible asset over its useful life, representing how much of the asset's value has been used up.

Units-of-production

A depreciation method that allocates an asset's cost based on its usage, output, or units produced, rather than the passage of time.