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December 22nd, 2015
Congress Extends IRC Section 181 for Films; Expands it to Cover Live Theatrical Productions
A new law, signed by the President on December 18, extends Section 181 of the Internal Revenue Code for film and television and expands it to cover live stage productions.
Film and Television: Section 181 (subject to its applicable limitations) permits the immediate deduction of the costs of producing a film or television production in the US. It had expired at the end of 2014. It has now been extended retroactively from January 1, 2015, and continues through December 31, 2016; it covers qualifying films where principal photography has commenced or will commence at any time in 2015 or 2016. Here's what producers need to know:
1. The new extension will apply to a producer who started principal photography of a television production or feature film at any time in 2015 (or will start prior to December 31, 2016), and who (or whose investors) will now be in a position to take advantage of the benefits of Section 181. This is true even though the producer may have completed the film in 2015, with no expectation of being able to claim the federal tax benefits of Section 181. This possibility arises because of the retroactive nature of the new extension (back to January 1, 2015). Important: to claim the benefits of Section 181 for a 2015 film, the producer must attach a Section 181 election form to the production company's 2015 federal income tax return. If your production has already filed its 2015 federal income tax return without a Section 181 election form, e.g., because the production used a short-year tax return in 2015 to accelerate the receipt of a state tax rebate, please contact us to discuss your situation.
2. The Section 181 extension applies to films with principal photography commencing on or before December 31, 2016. If a producer can accelerate principal photography so that it starts by December 31, 2016, Section 181 and its benefits should be available to all the qualifying production costs of the film, even though most of the costs occur in 2017 - provided that the principal photography continues in the ordinary course of production.
Live Stage: For the first time, Congress extended Section 181 to qualifying live stage productions that have their first paid public performance on or after January 1, 2016. This means that qualifying production costs incurred in 2015 can qualify for 181 treatment. It also means that a producer about to open a show may wish to consider whether the first paid public performance should, if feasible, be delayed until 2016.
If you have any questions about the new IRC Section 181 provisions and how they relate to your project, or about other film and television finance issues, please contact Thomas D. Selz at (212) 826 5535 or email@example.com, Bernie Topper at (212) 826 5547 or firstname.lastname@example.org, or Jeffrey Marks at (212) 826 5536 or email@example.com.
Other Entertainment Law Alerts
Major Studios and Guilds Forge New COVID-19 Production Safety Agreement
As production begins to restart in an ever changing COVID-19 landscape, The Alliance of Motion Picture and Television Producers (AMPTP) and other major studios announced an important deal with the DGA, IATSE, Teamsters, Basic Crafts, and SAG-AFTRA -- meant to ensure the safety and security of their members during the upcoming months. Read more.
September 22 2020
New York City Reopens for Film and Television Production
On July 17, 2020 NYC Mayor Bill de Blasio announced that, with the City entering Phase Four of Reopening on Monday July 20th, 2020, film and television production in the City can restart again in earnest. Read more.
July 21 2020
Los Angeles County Authorizes Television, Film, and Music Production Resume on June 12, 2020 With Strict Regulations
On June 11, Los Angeles County approved a staged resumption of film and TV production beginning June 12, 2020. However, it comes with extensive regulations. Read more.
June 16 2020