Capitol Report: Senate tax bill includes tax break for film producers
Producing movies is often more glamourous than profitable, but the latest Senate tax bill revives one obscure tax provision that will be applauded by film and television producers .
The incentive for movie investors was originally established by the Jobs Creation Act of 2004, scheduled to expire at the end of 2009, and then extended by President Obama until December 31, 2016.
Entertainment attorney Daniel J. Caplan told MarketWatch the recent revival of the provision “certainly enhances the ability to raise money from investors for independent productions.”
That’s because the provision, called IRC 181, allow investors to immediately expense or write off, the entire cost of the production, in the year in which the money is actually spent. If the production company is structured as a pass-through, the individual shareholder gets the deduction when they file their tax return that year.
The Senate’s “Chairman’s modification” as of Nov. 15 includes a provision that allows investors in qualified films, television and live theatrical productions to take a depreciation allowance deduction in the first year. The provision is applicable to productions initially released, broadcast, or performed live after Sept. 27, 2017, and before Jan. 1, 2023.
Treasury Secretary Steven Mnuchin isn’t expected to benefit from the provision although a report in an industry publication earlier this year said he was lobbying for it personally. That’s because Mnuchin is out of the movie business, according to a Treasury spokeswoman. He filed ethics disclosures last August saying he’d sold his interest in two partnerships related to Dune Entertainment, a production company he founded in 2004. His interest in RatPac-Dune Entertainment was also divested in August, according to the spokeswoman.
Mnuchin also sold his interest in Stormchaser Partners, a production company previously owned by his new wife Louise Linton.
Mnuchin’s disclosure with the Office of Government Ethics on Aug.17, 2017 did not disclose the purchaser or purchase price for the Dune Entertainment and Stormchaser interests. A recent media report suggest that Mnuchin’s joint venture with producer Brett Ratner, RatPac-Dune Entertainment, is now run by Ratner and continues to fulfil a contract with Warner Bros to help pay for up to 75 films.