US Tax Court denies tax deduction for qualified domestic production activities with regard to direct mail advertising

The US Tax Court has denied a taxpayer the deduction for qualified domestic production activities under section 199 of the US Internal Revenue Code (IRC) when the taxpayer used advertising materials printed by a third party for its direct mail advertising business (ADVO, Inc. & Subsidiaries v. Commissioner of Internal Revenue, Docket No. 17247-10, 24 October 2013).

The taxpayer was a US corporation that engaged in direct mail advertising, i.e. distribution of advertising materials by mail in…