I know there's been much talk on Section 181, but I wanted to chime in and give my two cents, as I fear not all of the information may be accurate.
Being a former cop, I know there is the "spirit" of the law vs. the "letter" of the law. I know what we all want Section 181 to be, but alas I'm afraid it has not been interpreted that way by the most important entity - the IRS. I know the legislation was written in such a way as to help investors feel better about investing with film in the US, to offer them an immediate tax break.
However, regardless of how we might interpret this, the important interpretation is how the IRS has defined it. Not an attorney or a CPA, just ask Mr. Wesley Snipes.
This is taken directly from the IRS:
Here is the link that explains the IRS regs that are in place for the statute section 181.
http://www.irs.gov/irb/2007-12_IRB/ar10.html
It is clear that there are a few major items that qualify for the deduction,
-member of the production company
-ACTIVE producer in the production
-invested capital in the production
This allows for the amount of capital investment to be deducted from taxes in the year the expenses occured vs having to wait for income from the production before being able to take the deductions. It all evens out in the end.
It still has a cap of $15 million in total deductions, and has been retroactively extended till the end of 2011.
I do know that they are trying to amend the legislation to reflect the spirit of the law, and I know the IRS is trying to be very liberal; but for now - you better be very careful in how you "advise" others on Section 181.
Out of all of our current investors, myself and the two other owners of our company were the only ones able to take advantage of 181.
This is not official advice, just some thoughts - do with it as you may.
Being a former cop, I know there is the "spirit" of the law vs. the "letter" of the law. I know what we all want Section 181 to be, but alas I'm afraid it has not been interpreted that way by the most important entity - the IRS. I know the legislation was written in such a way as to help investors feel better about investing with film in the US, to offer them an immediate tax break.
However, regardless of how we might interpret this, the important interpretation is how the IRS has defined it. Not an attorney or a CPA, just ask Mr. Wesley Snipes.
This is taken directly from the IRS:
Here is the link that explains the IRS regs that are in place for the statute section 181.
http://www.irs.gov/irb/2007-12_IRB/ar10.html
It is clear that there are a few major items that qualify for the deduction,
-member of the production company
-ACTIVE producer in the production
-invested capital in the production
This allows for the amount of capital investment to be deducted from taxes in the year the expenses occured vs having to wait for income from the production before being able to take the deductions. It all evens out in the end.
It still has a cap of $15 million in total deductions, and has been retroactively extended till the end of 2011.
I do know that they are trying to amend the legislation to reflect the spirit of the law, and I know the IRS is trying to be very liberal; but for now - you better be very careful in how you "advise" others on Section 181.
Out of all of our current investors, myself and the two other owners of our company were the only ones able to take advantage of 181.
This is not official advice, just some thoughts - do with it as you may.
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