Instructions for Form 8903 (2006)

This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Final regulations. Final regulations under section 199 were issued on June 1, 2006. See Additional Guidance, on this page.

Form W-2 wages. For tax years beginning after May 17, 2006:

The limit equal to 50% of Form W-2 wages is no longer based on Form W-2 wages from all businesses. Only wages properly allocable to domestic production gross receipts are included.
The rules for determining Form W-2 wages of partners and S corporation shareholders are simplified by determining Form W-2 wages without regard to any limit based on qualified production activities income.

See Form W-2 Wages, on page 5.

Simplified deduction method. Under the final regulations, you may be able to use the simplified deduction method if your average annual gross receipts are $100 million (up from $25 million) or less. See Simplified Deduction Method on page 4.

Activities in Puerto Rico. For tax years beginning after December 31, 2005, certain taxpayers can take the domestic production activities deduction for activities in Puerto Rico. A special rule applies when figuring Form W-2 wages. See section 199(d)(8) for details.

Instructions for Form 8903 - Introductory Material

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