Tax Deduction for Film Productions - Yeah for the Bailout?

[Jason Ing]

Provisions related to film and television productions: In order to keep movie production in the U.S., production companies would be allowed to deduct the cost of producing the films from their taxes. Rep. Diane Watson, D-California, has been one of the program's biggest supporters. The measure would cost taxpayers $478 million over 10 years.

Talk about self serving politics. Other earmarks has to do with oh-so-relevant arrows, motorsports racetrack...

http://www.cnn.com/2008/POLITICS/10/02/bailout.pork/index.html?section=cnn_topstories&eref=yahoo

 

[Clint Johnson]

Politicians love nothing more than an "emergency" bill that is portrayed as vital and in need of immediate passing. That way they can hang as many bad earmarks as they can shove in there. That is how a bill can go from three pages to five hundred pages in only a few days.

It would be best if this sort of thing was legislated away but it is how they buy support for a bill and/or how they get legislation passed that is too self serving and ludicrous to get passed on its own merit. Politicians will sign on to something that they know is wrong and harmful... so long as it benefits them personally and politically.

 

[Joel Kaye]

Politicians love nothing more than an "emergency" bill that is portrayed as vital and in need of immediate passing. That way they can hang as many bad earmarks as they can shove in there.

I'm with you that politicians shouldn't be sleazy enough to cave in. But they aren't the originators of most of these bad ideas. Corporations and their lobbiests are.

What we're seeing is not Gov't gone wrong. We're seeing exactly what happenes when Corporations have undue influence over the Gov't. That's what got us into this mess in the first.

 

[Shawn Nelson]

"I'm SHOCKED to discover gambling in this joint!" "Your winnings sir" "Thank you"

 

[number6]

"I'm SHOCKED to discover gambling in this joint!" "Your winnings sir" "Thank you"

:w00t: :turned: :usd: !

 

[N_Villers]

hmmm....

hmmm....

I learned that this deduction already was in existence, but only for independent film production -- before this recent expansion to include larger scale productions.....You'd have to read the exact language to know what it's all about.


8. Sec 502. Provisions related to film and television productions (Page 263)

In an effort to keep film and television productions in the U.S, they would be eligible for a tax incentive program. Under this program, the cost of production of qualifying films would be permitted to be immediately expensed -- that is, fully deducted from income for tax purposes -- in the year the expenditures occur. And makes other favorable tax treatments for production permanent.

 

[Mark L. Pederson]

We already have Section 181 - part of the 2004 Tax Act that allows a current deduction for the cost of “qualified film or television productions” in the year of the expenditure. Most accountants outside the biz don't know this.

For any qualified film or television production commenced after October 22, 2004, and before January 1, 2009, a taxpayer may elect to deduct expenses in an amount not to exceed an aggregate cost of $15,000,000. The limitation is increased to $20,000,000 if a significant amount of the production expenditures are incurred in areas eligible for designation as a low-income community or eligible for designation by the Delta Regional Authority as a distressed county or isolated area of distress. A production is treated as commencing on the first date of principal photography.

Therefore, in the initial year of production, the production costs would be deductible to the taxpayer under Section 181, but only against passive income. Any excess of the deduction (or “loss”) would carry forward and could be used to offset any ongoing income stream from the produced material.

I'm extremely curious for the exact legal wording of the "new" law - I suspect it just extends the current section 181 law past Jan. 2009.

 

[Clint Johnson]

I'm with you that politicians shouldn't be sleazy enough to cave in. But they aren't the originators of most of these bad ideas. Corporations and their lobbiests are.

What we're seeing is not Gov't gone wrong. We're seeing exactly what happenes when Corporations have undue influence over the Gov't. That's what got us into this mess in the first.

As long as the politicians have the ability to sell then it is only reasonable for corporations to buy. It is how the politicians have structured the entire process and blaming the corporations for buying influence from politicians is like blaming your grandmother for buying apples from the grocery store.

It would actually be fiscally irresponsible (albeit morally superior) for the corporation to NOT buy influence. In the early 1990s, Microsoft's "donations" were incredibly low- 1995 only saw about $16,000 go to into the politician's pockets. This ended up costing them billions of dollars with the United States v. Microsoft Antitrust lawsuit before they twigged to what was really happening and started paying both parties millions of dollars a year to make the lawsuit go away.

The only way to stop corporations from buying influence from politicians is to take away the politicians ability to do things that are worth corporations paying for - and their ability to extort money from corporations. Of course this will not happen because it has become and end in itself. The politicians sell their influence to garner more influence... to sell so that they can gain more influence.

It is like the old saying about the Russians- they planted potatoes so that they could make vodka... to give them strength to plant more potatoes.

 

[Michael Schrengohst]

"Corporations are the dictatorships in America. The politicians are the lubrication upon which these mighty vessels glide."

New Original Quote I thought up - Red Guy

Now move along there is nothing to buy or sell here.

 

[Mark L. Pederson]

•HR 1424 EAS
SEC. 502. PROVISIONS RELATED TO FILM AND TELEVISION PRODUCTIONS.
(a) EXTENSIONOFEXPENSINGRULESFORQUALIFIED FILMANDTELEVISIONPRODUCTIONS.—Section 181(f) (re-lating to termination) is amended by striking ‘‘December 31, 2008’’ and inserting ‘‘December 31, 2009’’.
292 •HR 1424 EAS
(b) MODIFICATIONOFLIMITATIONONEXPENSING.— Subparagraph (A) of section 181(a)(2) is amended to read
as follows: ‘‘(A) IN GENERAL.—Paragraph (1) shall not apply to so much of the aggregate cost of any qualified film or television production as exceeds $15,000,000.’’. (c) MODIFICATIONS TO DEDUCTION FOR DOMESTIC ACTIVITIES.— (1) DETERMINATION OF W–2 WAGES.—Paragraph (2) of section 199(b) is amended by adding at
the end the following new subparagraph: ‘‘(D) SPECIAL RULE FOR QUALIFIED FILM.—In the case of a qualified film, such term shall include compensation for services performed in the United States by actors, production personnel, directors, and producers.’’. (2) DEFINITION OF QUALIFIED FILM.—Paragraph (6) of section 199(c) is amended by adding at the end the following: ‘‘A qualified film shall include any copyrights, trademarks, or other intangibles with respect to such film. The methods and means of distributing a qualified film shall not affect the availability of the deduction under this section.’’.
293 •HR 1424 EAS
(3) PARTNERSHIPS.—Subparagraph (A) of section 199(d)(1) is amended by striking ‘‘and’’ at the end of clause (ii), by striking the period at the end of clause (iii) and inserting ‘‘, and’’, and by adding at the end the following new clause: ‘‘(iv) in the case of each partner of a partnership, or shareholder of an S corporation, who owns (directly or indirectly) at least 20 percent of the capital interests in such partnership or of the stock of such S corporation— ‘‘(I) such partner or shareholder shall be treated as having engaged directly in any film produced by such partnership or S corporation, and ‘‘(II) such partnership or S corporation shall be treated as having engaged directly in any film produced by such partner or shareholder.’’.
(d) CONFORMINGAMENDMENT.—Section 181(d)(3)(A) is amended by striking ‘‘actors’’ and all that follows and inserting ‘‘actors, production personnel, directors, and producers.’’.
(e) EFFECTIVEDATES.— 294

(1) INGENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to qualified film and television productions commencing after December 31, 2007

(2) DEDUCTION.—The amendments made by subsection (c) shall apply to taxable years beginning after December 31, 2007.

You can read the whole 400 pages of Senate boondoggle here -

http://www.rules.house.gov/110/text/110_hr4221_text.pdf