Using Section 181 to help finance your project:
The clock is ticking and there are only 20 days remaining to use section 181. If you are not familiar with Internal Revenue Code section 181, as a film maker shame on you. Federal job act allows for a production tax incentives. Section 181 allows for a 100 % tax deduction for motion pictures and TV sieres, oppose to film amortization over a 15 year period.
An investor will be able to make an investment with your project for a great ROI without giving up the 100% immediate deduction in the current year committed. Here are some of the guidelines to follow to become eligble for this deduction.
“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.
- 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”.
For an investor the qualifty deduction allows tax rebates and incentives, additional federal and state incentives, may have NOL to carryback two years or carryforward for twenty. If investors are set with this years tax incentives, make sure you take advantage of the grandfather rule in section 181 benefits by memorializing your project before December 31, 2011. Every dollar counts, so think like an investor.
