Domestic Production Activity Deduction DPAD
1. Business activity alone is not the only factor used in determining qualification for the Domestic Production Activity Deduction (DPAD). The actual deduction reported on IRS Form 8903 (Line 22) is the lesser of 9% of the qualified production activities income (QPAI) or 50% of W-2 wages. So basically in order to qualify you must have W-2 wages.
2. Under [Reg § 1.199-3(m)(2)(iii)] improvements to land and capitalized to land such as landscaping are considered construction activities only if they are performed in connection with other activities associated with the erection or substantial renovation of real property. Landscaping alone in and of itself does not usually rise to the threshold criteria for consideration of construction related expense.