According to the IRS, "to claim the Domestic Production Activities Deduction (DPAD), you must have a positive amount for each of the following three amounts:
- Qualified production activities income
- Adjusted gross income (AGI) for a taxpayer, estate, or trust (taxable income for all other taxpayers).
- Form W-2 wages you paid to your employees. Important: If you did not pay any Form W-2 wages, or have Form W-2 wages allocated to you on a Schedule K-1, you cannot claim a DPAD. For more information, click here."