Internal Revenue Code:Sec. 181. Treatment of Certain Qualified Film and Television Productions

From TaxAlmanac

Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle A - Income Taxes
       CHAPTER 1 - NORMAL TAXES AND SURTAXES
        Subchapter B - Computation of Taxable Income
         PART VI - ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS

Statute

    Sec. 181 Treatment of Certain Qualified Film and Television Productions.
   
    (a)Election To Treat Costs as Expenses.--
        (1) In general.--A taxpayer may elect to treat the cost of 
      any qualified film or television production as an expense which 
      is not chargeable to capital account. Any cost so treated shall 
      be allowed as a deduction.
        (2) Dollar limitation.--
                (A) In general.--Paragraph (1) shall not apply to 
                any qualified film or television production the 
                aggregate cost of which exceeds $15,000,000.
                (B) Higher dollar limitation for productions in 
                certain areas.--In the case of any qualified film or 
                television production the aggregate cost of which is 
                significantly incurred in an area eligible for 
                designation as--
                    (i) a low-income community under section 
                  45D, or
                   (ii) a distressed county or isolated area of 
                  distress by the Delta Regional Authority 
                  established under section 2009aa-1 of title 7, 
                  United States Code,
                subparagraph (A) shall be applied by substituting 
                `$20,000,000' for `$15,000,000'.

    (b) No Other Deduction or Amortization Deduction Allowable.--With 
     respect to the basis of any qualified film or television
     production to which an election is made under subsection (a), 
     no other depreciation or amortization deduction shall be allowable.
    (c) Election.--
         (1) In general.--An election under this section with 
       respect to any qualified film or television production shall be 
       made in such manner as prescribed by the Secretary and by the 
       due date (including extensions) for filing the taxpayer's return 
       of tax under this chapter for the taxable year in which costs of 
       the production are first incurred.
         (2) Revocation of election.--Any election made under this 
       section may not be revoked without the consent of the Secretary.
    (d) Qualified Film or Television Production.--For purposes of this 
     section--
         (1) In general.--The term `qualified film or television 
       production' means any production described in paragraph (2) if 
       75 percent of the total compensation of the production is 
       qualified compensation.
         (2) Production.--
               (A) In general.--A production is described in this 
                paragraph if such production is property described in 
                section 168(f)(3). 
               (B) Special rules for television series.--In the 
                case of a television series--
                  (i) each episode of such series shall be 
                      treated as a separate production, and
                  (ii) only the first 44 episodes of such 
                      series shall be taken into account.
               (C) Exception.--A production is not described in 
                this paragraph if records are required under section 
                2257 of title 18, United States Code, to be maintained 
                with respect to any performer in such production.
          (3) Qualified compensation.--For purposes of paragraph 
        (1)--
               (A) In general.--The term `qualified compensation' 
                means compensation for services performed in the United 
                States by actors, directors, producers, and other 
                relevant production personnel.
               (B) Participations and residuals excluded.--The 
                term `compensation' does not include participations and 
                residuals (as defined in section 167(g)(7)(B)).

    (e) Application of Certain Other Rules.--For purposes of this 
      section, rules similar to the rules of subsections (b)(2) and (c)
     (4) of section 194 shall apply.

    (f) Termination.--This section shall not apply to qualified film 
      and television productions commencing after December 31, 2008.

Sources

         Pub.L.108-357, Section 244, October 22, 2004.

Miscellaneous

                       
                               AMENDMENTS
    2005 - P.L. 109-135, Section 403(e)
        Amendments Related to Section 244 of the Act.--
            (1) Paragraph (2) of section 181(d) is <<NOTE: 26 USC 
        181.>> amended by striking the last sentence in subparagraph 
        (A), by redesignating subparagraph (B) as subparagraph (C), and 
        by inserting after subparagraph (A) the following new 
        subparagraph:
                    ``(B) Special rules for television series.--In the 
                case of a television series--
                          ``(i) each episode of such series shall be 
                      treated as a separate production, and
                          ``(ii) only the first 44 episodes of such 
                      series shall be taken into account.''.
                             
                      EFFECTIVE DATE OF 2004 AMENDMENTS
         Effective Date.--The amendments made by this section 
      shall apply to qualified film and television productions 
     (as defined in section 181(d)(1) of the Internal Revenue Code of
     1986, as added by this section) commencing after the date 
     of the enactment of this Act.

References