IRS Section 181 Film Production Incentives Nears Renewal

What Is IRS Section 181?

Will IRS Section 181 Be Renewed?

How Can I Take Advantage of IRS Section 181 Production Incentives?

As many in the Film and Television industry know, IRS Section 181, first enacted by Congress in 2004, (explained here), permits a 100% write-off for the cost of certain audio-visual productions (e.g., theatrical, television, DVD, etc.). It had applied to “qualified productions” that began principal photography before January 1, 2010.

Rumor has it that renewal of the Section for 201 has already passed the U.S. House of Representatives. According to a prominent entertainment lawyer familiar with the Act and the renewal status, the provision is set to go before the Senate for approval. If renewed, IRS Section 181 production incentives should be extended into 2010.

To qualify, productions need to commence before January 1, 2010. The deduction applies in the year the expenditure is incurred. Therefore, if production expenditures are incurred in more than one year, the immediate tax deduction will be taken in more than one year.

Like other tax issues, producers should consult with their professional tax advisors on any issues related to this new Federal tax incentive. In light of the new legislation, the US Treasury and IRS may revise their temporary regulations, which may come in the form of Notices and Regulations.

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