Noci Pictures Entertainment,LLC
Absolute Return Alternative Investments For Hedge Funds,Private Equity,Ultra High Net Worth Investors, Venture Capital.
(With Federal/State Tax Incentives, Credits, Rebates)

 

June 16, 2008

IRS SECTION 181 Law

 

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602 TD 9312

 

 

RIN 1545-BF95 Section 181 - Deduction for Qualified Film and Television Production Costs

 

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary regulation.

 

SUMMARY: This document contains temporary regulations relating to deductions for the cost of producing film and television productions under section 181.

 

These temporary regulations reflect changes to the law made by the American Jobs Creation Act of 2004 and the Gulf Opportunity Zone Act of 2005, and affect taxpayers that produce films and television productions within the United States.

 

The text of these temporary regulations also serves as the text of the proposed regulations set forth in the notice of proposed rulemaking on this subject in the Proposed Rules section in this issue of the Federal Register.

 

DATES: Effective Date: These regulations are effective February 9, 2007.

Applicability Dates: For dates of applicability, see §1.181-6T. FOR FURTHER INFORMATION CONTACT: Bernard P. Harvey, (202) 622-3110 (not a toll-free number).

 

 

SUPPLEMENTARY INFORMATION:

 

Paperwork Reduction Act


These temporary regulations are being issued without prior notice and public procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553).

 

 

For this reason, the collections of information contained in these regulations have been reviewed and, pending receipt and evaluation of public comments, approved by the Office of Management and Budget under control number 1545-2059. Responses to these collections of information are required to obtain a tax benefit.

 

 

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. For further information concerning this collection of information, and where to submit comments on the collection of information and the accuracy of the estimated burden, and suggestions for reducing this burden, please refer to the preamble of the cross- referencing notice of proposed rulemaking published in the Proposed Rules section in this issue of the Federal Register.

 

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law.

 

Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

Background

 

This document contains amendments to 26 CFR part 1 to provide regulations under section 181 of the Internal Revenue Code of 1986 (Code). Section 181 was added to the Code by section 244 of the American Jobs Creation Act of 2004, Public Law No.

 

 

108-357 (118 Stat. 1418) (Oct. 22, 2004), and was modified by section 403(e) of the Gulf Opportunity Zone Act of 2005, Public Law No. 109-135 (119 Stat. 2577) (Dec. 21, 2005).

 

Explanation of Provisions

 

For several years, independent filmmakers and television producers have moved production activities from the United States to other countries. Frequently, this has been motivated by credits and other incentives offered by foreign governments to attract the economic benefits gained by hosting these productions.

 

Congress enacted section 181 to make domestic production more attractive to these taxpayers.

 

Section 181 permits the owner of a qualified film or television production to elect to deduct production costs in the year the costs are paid or incurred in lieu of capitalizing the costs and recovering them through depreciation allowances if the aggregate costs do not exceed $15 million for each qualifying production ($20 million if a significant amount of the production costs are incurred in certain designated areas) (the “production cost limit”).

 

 

A film or television production is a qualified film or television production if 75 percent of the total compensation of the production is compensation for services performed in the United States by actors, directors, producers, and other relevant production personnel (the “75 percent test”).

 

Allowance of Deduction

 

 

The deduction under section 181 is allowed for the cost of producing qualified film and television productions for which principal photography begins after October 22, 2004, and before January 1, 2009.

 

 

Production costs incurred before or after this period may be deducted so long as principal photography commences during the period.

 

CONTINUE