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February 16th, 2018
New Federal Budget Revives Section 181
Among the provisions of the Bipartisan Budget Act of 2018 passed by Congress and signed by the President on February 9 is a retroactive extension of Internal Revenue Code Section 181. Prior to passage of the Budget Act, Section 181 permitted an immediate tax deduction of production costs for US film, TV or live stage productions as incurred, subject to certain limits on the amount of production costs that were deductible and to making an election under Section 181, but only if the production started on or before Dec. 31, 2016. Production costs for a production that started on or after January 1, 2017 were not eligible for an immediate tax deduction after the law expired on Dec. 31, 2016. The Budget Act retroactively restores the deductibility of production costs with respect to any such project that began in 2017.
This is different from the provisions in the Tax Cuts and Jobs Act affecting the deductibility of qualified film, TV and live stage production costs (which we recently wrote about here). The Tax Cuts and Jobs Act made changes to the immediate deduction of such costs incurred after September 27, 2017 with respect to productions placed in service after that date.
For further information about how and when to use Section 181 treatment, please contact Thomas D. Selz at (212) 826 5535 or firstname.lastname@example.org, Bernard C. Topper at (212) 826 5547 or email@example.com or Jeffrey M. Marks at (212) 826 5536 or firstname.lastname@example.org.
Other Entertainment Law Alerts
Section 181 Revived
The new tax law, commonly referred to as the Tax Cuts and Jobs Act (the "Act"), contains some good news for producers of motion pictures, television programs and live theatrical shows (each a "Production") and their investors.
January 11 2018
Video Game Association Challenges Chicago’s Online Streaming Services Tax
One of the nation's most prominent video game associations has decided to challenge Chicago's controversial "Cloud Tax."
June 16 2017
Film Tax Credits: New York Appeals Court Rejects Portion of Filmmaker’s Expenses
The New York film production tax credit is often a crucial piece of the financing for a film. But the rules governing qualification of expenses are strict.
July 18 2016