June 9, 2006
                              
VIA FACSIMILE and Email


The Honorable Donald L. Korb
Chief Counsel
Internal Revenue Service
1111 Constitution Ave, NW Room 3026
Washington, DC 20224

The Honorable Eric Solomon
Acting Deputy Assistant Secretary (Tax Policy)
The United States Department of the Treasury
1500 Pennsylvania Ave., NW, Room 3120
Washington, DC  20220


     RE: Income Attributable to Domestic Production (71 Fed.
     Reg. 31268, June 1, 2006)

Dear Sirs:

We are writing commend the U.S. Department of the Treasury
(Treasury) and Internal Revenue Service's (IRS) recent rule
finalizing proposed rules (70 Fed. Reg. 67220, November 4,
2005) under section 199 of the Internal Revenue Code.  The
proposed rule provided for a simplified deduction method
calculation for employers that generated $25 million or less
in annual gross receipts.  Under the final rule the
accessibility of the simplified deduction method calculation
is expanded to include employers that generate annual gross
receipts of $100 million or less.

The expansion in the final rule allows approximately 2.2
million employer firms engaged in the permitted production
activity to use a far less complicated method to determine
their deduction.  The exact amount of regulatory savings
this provides is not known at this time, but increasing the
simplified deduction method availability to 99.5 percent of
the employer firms engaged in the permitted activities
should amount to a great savings to those firms.

In particular, the Office of Advocacy appreciates the
efforts of George Manousos, Tax Specialist in Treasury's
Office of Tax Legislative Counsel; Heather Maloy, IRS
Associate Chief Counsel (passthroughs and special
industries) and Acting Deputy Chief Counsel (technical);
Paul Handleman, Senior Technician Reviewer (passthroughs and
special industries); David Schneider, Special Counsel to the
Associate Chief Counsel (passthroughs and special
industries) and all of the staff of the Treasury and IRS who
worked hard to ensure that smaller companies are not overly
burdened in taking advantage of the section 199 domestic
production activity deduction.

The Office of Advocacy looks forward to working closely with
the IRS and Treasury on issues of concern to small
businesses.  Please do not hesitate to contact Candace B.
Ewell, Assistant Chief Counsel for Tax for additional
information on my office or our involvement in tax
regulatory issues at (202) 401-9787 or
Candace.Ewell@sba.gov.

Sincerely,

/s/
Thomas M. Sullivan
Chief Counsel for Advocacy


/s/
Candace B. Ewell
Assistant Chief Counsel for Tax