Section 199 - Medicine on Time
Oct 22

Section 199

You may have an opportunity to claim Section 199’s tax break, enacted for businesses who perform domestic manufacturing and other, certain production activities.

How can you determine if you’re eligible for a Section 199 refund?

As outlined by John W. McKinley, CPA, CGMA, JD, LLM and Eric Zilber, taxpayers need to persuasively claim that a unique product was created, and the packaging, repackaging, labeling or minor assembly was not the only activity involved in production. The courts found the following key aspects of the production process persuasive for taxpayers claiming Section 199:

  • The processes relied upon assembly line workers and machines (ex. using machines to automate the multi-dose packaging process)
  • The form, purpose and resulting demand of the final products were distinct from items before the process began
  • Subassembly of the items into the final form did not constitute most of the process resulting in the final product

Use these points as a guide to measure if your activities qualify as manufacturing, producing, growing or extracting (MPGE). Contact your certified public accountant today to see if your business qualifies for a Section 199 refund.

For more information, please read “New Product or Different Presentation?” by John W. McKinley, CPA, CGMA, JD, LLM and Eric Zilber from the Journal of Accountancy.

We, Medicine-On-Time, are not CPAs or lawyers. Please consult your CPA for more information about Section 199 and if you qualify for this federal tax refund.