If you’re somehow involved in the film industry, or want to be, you’ll want to not only read about Section 181 of the IRS Code as created in the JOBS Act of 2004, you’ll want to contact your elected representatives to get it passed again this year — it sunsets at the end of every year, and has not been renewed for 2014.
In broad strokes, Section 181 is the government’s smart way of keeping film production and film production dollars in the US by giving 100% tax write-off for any money invested in a film, in the year of investment.
Here is the bird’s eye view:
- 100% of the motion picture costs are deductible in the same year of investment.
- 75% of the motion picture must be shot in the US to qualify for Section 181
- There is a $15 to $20 million dollar budget cap.
- There is no minimum film production budget cost.
- TV pilots, TV episodes (up to 44), short films, music videos and feature films all qualify for Section 181.
- Section 181 can be applied to active income or passive income.
- Investors can be either individuals or businesses.
- Section 181 is retroactive to 2004 and was just renewed as part of the ‘Fiscal Cliff’ Bill on early 2013.
- There is no expectation for film distribution or film completion.
- The motion picture’s corporation issues Schedule K-1’s to the investors so they can take advantage of Section 181.
And that’s why you need to act! You need to contact your elected officials and ask them to renew Section 181 for 2014, regardless of whether you’re in the Major Studio or Independent worlds, but especially if you’re independent. Did you know that the independent film world spends at least $3 billion per year on productions? A recent article on Cultural Weekly, they come up with that estimate based on the number of films submitted to the Sundance Film Festival. They even posit the question, are independent filmmakers the 8th studio?
We are the ones offering the choices that the Major Studios won’t risk. And the audiences are growing tired of the constant flops from the Hollywood recycled garbage.
If you’re an investor, this is an unprecedented tax write-off with no questions asked. Need a tax write-off? Then find yourself a production company with a project with guaranteed distribution, and couple that with State incentives and not only have you reduced your tax liability to the Federal government, you have also increased your chances of getting a return on your investment.
If you’re a filmmaker, this is the icing on the financing cake. How many other options are there for tax write-offs of this magnitude?
Every moment of this year that Obama refuses to renew this legislation is hurting all of us in the film world – full-time, part-time, Major Studio, network, independent… all of us. How many more projects would be financed if 181 were active again?
If you don’t know who your elected officials are, you can find out on this website: http://www.usa.gov/Contact/Elected.shtml
Tell everybody you want Section 181 renewed this year (2014) and every year. More investors in film means a greater chance of getting paid work in the film world.
As Bobby says “Let’s make some noise!”
Bobby + Val