Indiefilmlaw's Blog
Ideas, Inspiration and Legal Resources for Artists, Filmmakers, Producers and Film Students

Section 181 “Indie” Film Tax Credit Resurrected in Tax Deal

West face of the United States Supreme Court b...

Image via Wikipedia

Obama has breathed new life into the Section 181 film tax credit (originally blogged about here) that had expired at the end of 2008. Originally signed into law as part of the 2004 Jobs Creation Act, it has been resurrected as part of the controversial new tax bill. The new tax bill recently signed into law will extend the film tax credit to the end of 2011.  Importantly, it can be applied retroactively to all qualifying films produced in 2011 and 2010.

The bill allows income tax incentives for investors in independent film and television projects. Section 181 permits a 100% write-off for the cost of certain audio-visual works, regardless of what media they are destined for (e.g., theatrical, television, DVD, etc.).

There are some limitations to the credit, such as:

  • The aggregate costs do not exceed $15 million for each qualifying production ($20 million if a significant amount of the production costs are incurred in certain designated areas).
  • A film or television production is a qualified film or television production if 75 percent of the total compensation of the production is compensation for services performed in the United States by actors, directors, producers, and other relevant production personnel (the 75 percent test).
  • The incentive only applies to monies spent from US equity investors – you cannot benefit from presale and gap loans.
  • Television production is limited to 44 episodes.

This widely-anticipated and closely-watched renewal brings a sorely needed benefit at a critical time in independent film finance. Independent film projects continue to struggle to find financing. Low budget indie filmmakers may have the most to gain because their films are often financed almost entirely by one are a few equity investors, all of whom can share in this benefit.

————————————————————————————————————————————————-

Safeguarding Ideas, Relationships & Talent®

Filmmakers face an often confusing and changing set of challenges trying to ensure that their business remains legally compliant. Yet few can afford the highly-qualified and versatile legal staff needed to deal with today’s complex and inconstant legal and regulatory environment. Adler & Franczyk is a boutique law firm created with a specific mission in mind: to provide businesses with a competitive advantage by enabling them to leverage their intangible assets and creative content in a way that drives innovation and increases the overall value of the business.

We approach our relationship with each client as a true partnership and we view our firm as an extension of their capabilities. Our primary value is our specialization on relevant and complex issues that maintain the leading edge for our clients. We invite you to learn more about the services we offer and how we differ.

On the web: www.ecommerceattorney.com
On Twitter: http://www.twitter.com/adlerlaw
On LinkedIn: www.linkedin.com/in/adlerlaw

Advertisements

No Responses to “Section 181 “Indie” Film Tax Credit Resurrected in Tax Deal”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: