Qualified Production Activities Income - QPAI

AAA

DEFINITION of 'Qualified Production Activities Income - QPAI'

Income derived from domestic production that qualifies for reduced taxation. More specifically, qualified production activities income is the difference between the manufacturer's domestic gross receipts and aggregate cost of goods and services related to producing the domestic goods. This reduced tax is intended to reward manufacturers for producing goods domestically instead of overseas.

INVESTOPEDIA EXPLAINS 'Qualified Production Activities Income - QPAI'

The IRS mandates that any domestic manufacturer of goods can exclude 6% of all income derived from goods production from income taxation in 2008 and 2009. The tax-free rate for QPAI increases to 9% in 2010.

This type of income does not include revenue generated from the restaurant industry, electricity or natural gas production or real estate transactions.

RELATED TERMS
  1. Domestic Production Activities ...

    A deduction against income derived from domestic manufacturing ...
  2. Material Participation Test

    A set of criteria that determines whether a taxpayer is a material ...
  3. Earned Income

    Income derived from active participation in a trade or business, ...
  4. Production Efficiency

    1. An economic level at which the economy can no longer produce ...
  5. Outsourcing

    A practice used by different companies to reduce costs by transferring ...
  6. Factors Of Production

    An economic term to describe the inputs that are used in the ...
RELATED FAQS
  1. How can I tell if I'm eligible for an EITC?

    According to the IRS, over 22 million taxpayers received $41.4 billion dollars in earned income tax credit (EITC) for tax ... Read Full Answer >>
  2. How can I calculate funds from operation in Excel?

    In general, the terms "work in progress" and "work in process" are used interchangeably to refer to products midway through ... Read Full Answer >>
  3. When does Q4 start and finish?

    Most companies such as Facebook have financial years that end on December 31st. For these companies, the fourth quarter begins ... Read Full Answer >>
  4. How are transfer prices set?

    The United States, like most nations, does not want to allow transfer pricing methods that reduce the amount of taxes the ... Read Full Answer >>
  5. Where do deferred tax liabilities come from?

    A deferred tax liability is the result of differences in the way a company does its financial accounting for reporting purposes ... Read Full Answer >>
  6. When is it useful to look at a company's fixed asset turnover ratio?

    It is useful to look at a company's fixed asset turnover ratio when an outside observer, such as an investor, wants to know ... Read Full Answer >>
Related Articles
  1. Economics

    Globalization: Progress Or Profiteering?

    Proponents of globalization argue that it helps the economies of developing nations and makes goods cheaper, while critics say that globalization reduces domestic jobs and exploits foreign workers. ...
  2. Forex Education

    Global Trade And The Currency Market

    Learn how the Bretton Woods system got the ball rolling for world trade.
  3. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  4. Economics

    NAFTA's Winners And Losers

    Read on to find out who this free-trade agreement helped, and who it hurt.
  5. Taxes

    Corporate Tax Rates: The Highs and the Lows

    The United States is No. 2 in the world for its high corporate tax rate. There are ways around paying it, and many nations with lower rates are worse off.
  6. Economics

    What's Involved in Customer Service?

    Customer service is the part of a business tasked with enhancing customer satisfaction.
  7. Economics

    What is Involved in Inventory Management?

    Inventory management refers to the theories, functions and management skills involved in controlling an inventory.
  8. Entrepreneurship

    What's the Verdict on START-UP NY?

    START-UP NY is an initiative designed to attract companies to New York State by giving them 10 years of tax breaks. Sounds good, but is it a success?
  9. Economics

    What Does Accretive Mean?

    In the business world, accretive most often to refers to additional growth from outside sources.
  10. Economics

    Explaining Prime Cost

    Prime cost is a way of measuring the total cost of the production inputs needed to create a given output.

You May Also Like

Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  3. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  4. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
  5. Rule Of 70

    A way to estimate the number of years it takes for a certain variable to double. The rule of 70 states that in order to estimate ...
  6. Risk Premium

    The return in excess of the risk-free rate of return that an investment is expected to yield. An asset's risk premium is ...
Trading Center