IRS Chief Counsel - Pharmacy’s photo processing activities qualify for section 199 deduction  

August 16: The IRS today posted an IRS Chief Counsel memorandum* concluding that the photo processing activities of the taxpayer (a pharmacy care provider) are manufacturing, production, growth, extraction (MPGE) activities of qualifying production property (QPP) for purposes of IRC section 199.  CCA 20133302F (released August 16, 2013, and dated July 16, 2013)

The IRS memo [PDF 92 KB] found that the taxpayer’s photo processing activities by which it produced photo products other than picture CDs or movie DVDs were MPGE activities and that the affixing of a customer’s photo and/or movie files onto photo CDs and movie DVDs is a service.


*Chief Counsel Advice documents are legal advice, signed by executives in the National Office of the IRS Office of Chief Counsel and issued to IRS personnel who are national program executives and managers. The documents are issued to assist IRS personnel in administering their programs by providing authoritative legal opinions on certain matters, such as industry-wide issues. However, they are not to be used or cited as precedent.




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