Renee manufactured and sold a gadget a specialized asset, Ask an Expert

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Renee manufactured and sold a "gadget," a specialized asset used by auto manufacturers that qualifies for the domestic production activities deduction. Renee incurred $22,100 in direct expenses in the project, which includes $1,840 of wages Renee paid to employees in the manufacturing of the gadget.

What is Renee's domestic production activities deduction for the gadget in each of the following alternative scenarios?

a.Renee sold the gadget for $37,700 and she reported AGI of $87,250 before considering the manufacturing deduction.

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