This essay provides a case study of the difficulties entailed in reforming the corporate tax code by examining the costs and distortions associated with one large special tax preference, Section 199 of the corporate code. Enacted in 2005, this provision provides a special deduction for some of the profits arising from certain designated “domestic production activities.” Our analysis shows that while the provision was originally intended to help manufacturing, it now provides tax benefits for a number of other, selected industries, including the information industry (including film production), mining, and construction. In many cases, eligibility is arbitrary: For example, food processing qualifies but not retail food businesses – unless the food establishment roasts beans used to brew coffee. At the same time, vital areas such as health care, finance, insurance, and educational services receive no benefit, and neither do many labor-intensive industries such as transportation and warehousing, administration and support, retail trade, and accommodations and food services. From 2005 to 2009, for example, Section 199 provided the information and movie industry, on average, 60 times the benefits received by these other vital and job-intensive industries. And within the manufacturing sector, Section 199 provided by far the greatest benefits, relative to the size of manufacturing sub-industries, to beverage and tobacco producers, followed by chemicals, and then by computer and electronic products. Traditional manufacturing industries such as textiles, apparel, wood products, leather products, printing, and furniture cannot claim significant benefits from Section 199. We also show that that while these allocations distort investment, there is no evidence that the provision promotes job creation in those industries that use it most. Furthermore, the highly complex terms of Section 199 induce companies to channel their investment and other business decisions in the particular ways required to claim the deduction. As a result, Section 199 further distorts the allocation of capital and other critical resources, including entrepreneurial activity, both within and across industries, and for the economy as a whole. Finally, Section 199 also costs the Treasury an average of more than $16 billion a year, putting upward pressure of the corporate rate. In the end, Section 199, like other special preferences, tends to reduce the efficiency and output of both those firms which claim the preference and those effectively unable to do so. By phasing out such preferences, policymakers could eliminate their distorting effects, and generate some $164 billion over the next 10 years. So doing would produce sufficient revenues to reduce the tax rate for all corporations by 1.2 to 1.3 percentage-points.