If you thought investing in film was risky, think again.
Turns out the 2018 tax bill helps the entertainment business! Section 181 provides 100% tax deduction for motion picture production. Simply put, investment in film or television is 100% tax deductible in the same year invested and can be applied to active or passive income. Investors can be individuals or businesses and can invest up to $20,000,000 in productions which have at least seventy-five percent of its production completed within the United States. There is no minimum film production budget cost. TV pilots, TV episodes (up to 44), music videos, feature films, short films all qualify for Section 181. There is no expectation for film distribution or completion. Section 181 is retroactive. The motion picture's corporation (LLC) issues Schedule K-1's to the investors so they can take advantage of Section 181.
Investing in film is way less risky than before using the tax rebates and incentives within a state for money spent on film combined with the benefits of Section 181. For example, if a tax payer is in the is in the thirty-five percent (35%) tax bracket and a qualifying film is shot in Texas, which has a tax credit up to twenty-percent (22.5%) for in-state spend more than $3.5M, an investor will be eligible to recapture conceptually fifty-five percent (57.5%) of their investment in a qualifying production. The investor could have this money before the film is released and/or makes back any money. This type of investment assurance is hard to come by in today's economy.
Author: Producer Jennifer Hutchins