Question for FilmTVLaw.com:
I read about how the Section 168 k deduction is the new film finance tax deduction and that it replaced Section 181? Can an independent film qualify and where do I have to shoot it to get the big tax break?
Answer by Brandon Blake, Entertainment Lawyer:
I am getting more calls than ever before about investor financing feature films. This summer is set to be a goldrush for film producers as both Americans and Europeans rush back to the theaters. My new article answers all the preliminary questions about whether investor financing under IRS Section 168 k is right for a new film or television series. In addition to this article, I share more than a hundred in depth entertainment industry articles on my website at www.filmtvlaw.com/entertainment-lawyer-qa. Please also check out my bio at www.imdb.me/brandonblake.
Section 168(k) Film Deduction Overview
For anyone who has not heard about it, Section 168 k is the new film tax deduction under the Tax Cuts and Jobs Act that replaces Section 181. Most of the provisions are the same, providing a 100% tax deduction for feature film and television series in the first year of distribution. The tax code is more complex for Section 168(k) than it was for Section 181, so it is more important than ever to retain our entertainment law firm to prepare the offering and handle the paperwork for your investors. In order to determine if IRS Section 168 k is right for your film or television series, check out this detailed Frequently Asked Questions where I go step-by-step to help you determine if your film or series qualifies for Section 168 k.
Section 168 k Deduction Frequently Asked Questions:
What Does the Section 168 k Deduction Do for My Project?
IRS Section 168 k under the Tax Cuts and Jobs Act allows your investors to take a 100% tax deduction for the feature film or television series in the first year of distribution. In order for your investors to take the deduction you must qualify the film under Section 168(k). Our law firm will qualify your film or series as part of preparing a securities offering for it.
Does My Film or TV Series Qualify?
Our firm can qualify any US based feature film or television series for the Section 168 k deduction film and television incentive.
Can I Qualify A Film or Television Series That Was Already Shot?
No, our entertainment law firm cannot qualify a film or television series for the Section 168 k deduction that has already been shot. Only a new feature film or television series that has not yet been shot can be qualified for the Section 168(k) film deduction by our firm. Even if you used investor financing for your film in the past two years, we cannot qualify your project if you already shot your project.
Is There a Minimum or Maximum Budget Under IRS Section 168 k?
No, there is no minimum budget size, and there is no longer a maximum budget either under the Section 168 k deduction film and television incentive. This is a change from the old Section 181 where there was a cap of $25 million.
How Do My Investors Take the Section 168 k deduction?
Your investors can take the deduction if they have invested into a qualifying film, television or theater production, provided that the project is distributed by 2023, and that the producers have filed the appropriate tax statements with the IRS.
Can Your Law Firm Make the Tax Filings for My Project Under IRS Section 168 k?
Yes, our firm will make all of the appropriate tax elections for your feature film or television series under the Section 168(k) film deduction, provided that you hired our firm to set up the securities offering and that our firm represents the offering. We cannot file for the deduction unless our law firm set up the initial securities offering and qualified the film or television series for the deduction.
Do I Also Have To File My Project with the SEC?
Yes, any project that is raising money for an independently produced feature film or television series under the Section 168 k deduction film and television incentive must also file the investment with the Securities and Exchange Commission (SEC). Our law firm will file your project with the SEC as part of putting together a securities offering.
If I Shoot In Georgia, Louisiana or New Mexico, Can I Still Get the 168 k Deduction?
Yes! You can “double up” and take both the Section 168 k deduction film and television incentive, and also still qualify for any state tax incentives.
Do Short Films Qualify for the Section 168(k) film deduction?
Yes, however, you do need to find distribution for the short, which can sometimes be a challenge. But there is nothing in the rules of IRS Section 168 k that would disqualify a project because it does not meet a minimum length.
How Many Films Can I Shoot Under the Section 168 k deduction?
There is no maximum number of films or series you can make under the Section 168(k) film deduction, and our firm can set up a film fund that provides the IRS Section 168 k deduction on each of the films.
I have personally qualified hundreds of films for the Section 168(k) film deduction. Feel free to contact our firm about securities services for your next film or television series. Unfortunately for liability reasons I cannot provide any other details about Section 168 k until you have paid for our securities services and become a client, but I am happy to provide a quote and timeframe for qualifying your film.
As with all complex entertainment matters, please seek experienced entertainment legal counsel before making legal and financial decisions. This article is for informational purposes only and does not represent legal, accounting or tax advice. Do not act on this article without hiring legal representation.
- By Brandon Blake, Entertainment Lawyer