Time Running Out for Tax Incentives for Filmmakers

Posted in Tax News

In 2004, Congress gave filmmakers a wonderful gift in the form a tax break which allows the owners of a qualified film or television production to deduct production costs in the year the costs were incurred, rather than capitalizing and recovering such costs over time through depreciation.  This is a substantial incentive for investors because they can more quickly recognize tax benefits from their investment in your film or television production.  There’s no minimum to spend, and the maximum is $15 million ($20 million for shooting in a “historically underused” area of the country). Substantial portions of the expenses must be spent within the United States.

If you’re a filmmaker approaching investors about your project, this is a wonderful incentive to remind them about.  But time is of the essence because the change in regulations, officially known as Section 181, is only temporary.  In order to qualify, principal photography, or in-between animation in the case of an animated production, must begin before January 1, 2010.  Although there’s plenty of discussion about extending this provision again (it originally expired January 1, 2009) there are no firm measures in place yet to do so.