Adjustment for Domestic Production Activities

The federal American Jobs Creation Act of 2004 allows a deduction equal to a portion of a taxpayer's qualified production activities income. The deduction is claimed on Line 35 of Federal Form 1040. North Carolina does not follow the domestic production activities deduction. Enter this amount on Form D-400 Schedule S, Part A – Additions to Federal Adjusted Gross Income, line 2. The total additions to federal adjusted gross income entered on Form D-400 Schedule S, line 4, also needs to be entered on Form D-400, line 7.