New Integrity Films Section 181
Home Producers Sect. 181
Film Slate
Investors
FAQs Contact Us  


This material is for informational purposes only and should not be viewed as tax advice
with respect to your production activities.
For such advice, you should consult with your tax advisor.
For Investors and Advisors - the information below provides more details for Section 181 U.S. Federal Income Tax break..


 
 

Domestic Film Production Incentive Program
Revised Section 181 of the Internal Revenue Code
Congressional Research Service Summary (courtesy of DGA)
Section 181 published IRS tax code regulation (.pdf file): (2007)
Section 181 published IRS Example Scenarios (.pdf file): (2007)
IRS Tax Code Link for Section 181 (2007)


Domestic Film Production Incentive Program
Revised Section 181 of the Internal Revenue Code

PRIMARY BENEFITS

Qualifying Film Expenses Immediately Deductible. (Courtesy of the DGA.)

Producers or active financial participants in qualifying film and television productions may elect to immediately deduct the cost of qualifying film expenditures in the year the expenditure occurs.

  • Qualified film and television productions include any film or video tape production of a motion picture or television show whose costs would otherwise be required to be capitalized but for section 181. Only the first 44 episodes, including the pilot production, of a television series are eligible under the law.

  • In the case of a film co-produced by multiple investors, the deduction for qualifying expenditures must be allocated among the owners of the film in a manner that reasonably reflects each owner’s proportionate investment and economic interest in the film.

  • Qualified films do not include sexually explicit productions as defined in section 2257 of title 18 of the U.S. Code.
Qualifying Expenses Include the First $15 Million of Expenditures.

The proposal applies to the first $15 million in production costs for qualifying film or television productions. This is a major expansion from the previous law which only applied to productions with production costs under $15 million.

  • A higher expenditure cap of $20 million applies to productions the aggregate costs of which are “significantly incurred” in: a) areas eligible for designation as a low-income community under the New Markets Tax Credit program,1 or b) areas eligible for designation by the Delta Regional Authority as a distressed county or isolated area of distress.

  • As defined by the New Markets Tax Credit program, qualifying low-income communities include any census tract if (a) the poverty rate for such tracts is at least 20%; or (b) (1) in the case of census tracts not located within a metropolitan area, the median family income for the tract does not exceed 80% of statewide median family income, or (2) in the case of a tract located within a metropolitan area, the median family income for the tract does not exceed 80% of the greater of statewide median family income or the metropolitan area median family income. Information on qualifying communities can be found at: http://www.cdfifund.gov/what_we_do/programs_id.asp?programID=5

  • A list of areas eligible under the Delta Regional Authority statute as distressed counties or isolated areas of distress can be found at:
    http://www.dra.gov/about/maps.aspx

  • The IRS temporary regulations (T.D. 9312) outline two alternative tests to determine if costs are “significantly incurred” in qualifying low-income areas. The first test is based upon production costs and establishes a 20% threshold for the test. It compares production costs incurred in first-unit principal photography that takes place in a designated area to all productions costs incurred in first-unit principal photography. This does not include preproduction, editing and post-production costs. The second test is based upon the number of days of principal photography. If at least 50% of the total days of principal photography take place in the designated area, the production will be deemed to satisfy the significantly occurred test.
Definition of Qualifying Production.

To qualify, at least 75% of the total compensation expended on the production must be for services performed in the United States.

  • Qualifying compensation includes payments for services performed in the United States by actors, directors, producers, and other relevant production personnel. Compensation does not include participations and residuals.
Tax Benefit Duration.

This revised domestic film production incentive program – covering the first $15 million of costs of all productions — will be in effect for qualifying productions commencing after December 31, 2007 and before January 1, 2010.

Section 181 Extensions for 2010-2011:

SEC. 744. SPECIAL EXPENSING RULES FOR CERTAIN FILM AND TELEVISION PRODUCTIONS.
(a) In general.-Subsection (f) of section 181 is amended by striking "December 31, 2009" and inserting "December 31, 2011". 111th Congress, House and Senate: (.pdf files)

 

 


The DGA has worked with a coalition of film industry organizations for nearly ten years to stem the tide of runaway production. The current effort focused on amending Section 181 to make the United States a competitive place for film and television production. Combined with the incentives that many states have enacted, we believe that the federal incentive will serve as an effective tool to keep more television and film production in the United States.

This material is for informational purposes only and should not be viewed as tax advice with respect to your production activities. For such advice, you should consult with your tax advisor.


Runaway Production Alliance Members:

  • Academy of Television Arts and Sciences
  • American Federation of Musicians
  • American Federation of Television and Radio Artists
  • Association of Independent Commercial Producers
  • Association of Talent Agents
  • The Caucus for Television Producers, Writers and Directors
  • Directors Guild of America
  • Film Musicians Secondary Markets Fund
  • Hollywood Post Alliance
  • International Alliance of Theatrical Stage Employees
  • Producers Guild of America
  • Independent Film & Television Alliance
  • International Brotherhood of Teamsters, Local 399
  • Recording Musicians Association
  • Screen Actors Guild
  • US Film Commission Caucus, Association of
    Film Commissioners International

Home Producers Sect. 181
Film Slate
Investors
Contact Us