Section 181 Extension Bills Are Here: HR 2720/3931!

25 11 2009

As predicted, Section 181 is back on the front burner now that the House passed a Health Care reform bill. HR 3931 and HR 2720 have made their way from introduction to Congress as Bills to the House Ways and Means Committee. 

HR 3931 seeks to extend 181 until the end of 2011.  HR 2720 goes well beyond a 2 year extension and looks to make 181 a permanent tax incentive  for qualified films. 

Obviously the Bills will have to move swiftly to make it to a vote before the end of the year, but this is great news for those film makers who were not quite ready to start a production in 2009. 

HR 2720 is simple and straight forward (not part of a large extender Bill (yet)).  Here is the text:

A BILL

To amend the Internal Revenue Code of 1986 to make permanent the election to treat the cost of qualified film and television productions as an expense which is not chargeable to capital account.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. EXPENSING OF QUALIFIED FILM AND TELEVISION PRODUCTION COSTS MADE PERMANENT.

Section 181 of the Internal Revenue Code of 1986 (relating to treatment of certain qualified film and television productions) is amended by striking subsection (f).

HR 3931 is also quite straight forward:

A BILL

To amend the Internal Revenue Code of 1986 to extend for 2 years the election to treat the cost of a qualified film or television production as an expense which is not chargeable to a capital account.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. EXTENSION OF TREATMENT OF CERTAIN QUALIFIED FILM AND TELEVISION PRODUCTIONS.

(a) In General- Subsection (f) of section 181 of the Internal Revenue Code of 1986 is amended by striking ‘December 31, 2009’ and inserting ‘December 31, 2011’.

(b) Effective Date- The amendment made by this section shall apply to qualified film and television productions commencing after December 31, 2009.

Follow the success (hopefully) of the Bill here and on http://www.govtrack.us/congress/bill.xpd?bill=h111-2720 and http://www.govtrack.us/congress/bill.xpd?bill=h111-3931

Music readers, this bill applies to you.  Money spent on a qualified music video (even internet productions) can qualify for the tax incentive under 181.  Search my site for other articles about Section 181. 





How to Grandfather Under Section 181

20 11 2009

 

Better start filming!

 

 

 

As the deadline for Section 181 quickly approaches, I have received a bunch of questions related to “grandfathering”.  The statute itself does not provide a bright line answer, so I went to the source, the IRS.

According to one of the authors of the film incentive, in order to grandfather under Section 181 and have your film qualify even if you do not complete it until next year, you simply need one true day of principal photography.  One full day with a director, lighting, cast, etc. should do the trick.  If you have that one day and your film qualifies under the other requirements of 181, you will still be able to utilize the incentive.

This is great news for those film makers out there that are just about ready to start shooting and have not quite completed their money raise for a film.  If the incentive is not renewed (it is set to expire at the end of this year), a film that qualifies in 2009, will still be able to offer the incentive to investors who invest in 2010.

In other 181 news, it appears that the section may have found its way onto a couple of extender bills.  According to the IRS, there may be a couple of bills out there that include an extension f the incentive; one for 2 years and one which would make it permanent.  Again, this is just speculation, but rumors in Washington D.C. sometimes come true.

I have begun to work with film makers on their private placement offerings or addendum to their offerings to include an opinion on this grandfathering issue.  If you are interested, please feel free to contact me at jkaplan@stahlcowen.com.

*As with all my posts, this post is for information purposes only and does not constitute legal advice.  I am not your lawyer and you may not rely on the content of this website as though I am your lawyer.





Section 181 Back on Track???

12 11 2009

Only time for a quick update folks.  Now that the Health Care proposal is out of the House and on its way to the Senate, the tax folks have more time (although not that much more time) to focus on tax incentives and credits that are set to expire at the end of this year.  For our purposes Sections 181 and 199 are really the only one matter.

According to a staff tax attorney at the Ways and Means Committee, the focus has been shifted and if Section 181 has a chance of renewal or extension, it will occur in the next two weeks.  Please note that even if the renewal of Section 181 is proposed in the next week, there is no guaranty that the bill which carries the renewal proposal will pass.  To that point, you will not see a renewal of Section 181 in a proposal by itself.  Any renewal of the film incentive statute will be included on a larger and broader “Extender” package introduced to Congress before the end of the year.

So, I suppose this is good news.  However, if you can get started on your films, do it now or forever hold your peace!

 





CMJ Recap and Proof of Change

1 11 2009
french_horn_rebellion_01

French Horn Rebellion Ripped it Up at CMJ 09

I’m finally fully recovered from my week in NYC.  While many of the topics discussed by panels at CMJ this year were slightly on the negative side (not too surprising when your industry is in constant flux), there was an air of renewed hope and positivity that musicians and those who are dependent on music to make a living may be turning the corner.

Huge issues, such as how to compensate musicians who have content ripped off or used without permission on Goliath’s like You Tube, do not seem to be any closer to being resolved.  One lawyer from a large internet file sharing site expressed her frustration that it took her client 8 years to work out a comprehensive license deal with the labels.  The labels countered that with a complaint that the country’s Anti-Trust laws prohibit the labels from meeting in the same room let alone coming up with a unilateral price for licensing music and come up with a fair price for licensing; music.  The result will be years of musicians losing out on mechanicals and licensing revenue.

But, like I said, the weekend was not without some optimism.  Focus groups discussed new ways for musicians to make money and reach their fan groups.  Several of the methods they discussed were ideas that this site previously discussed (Click Here and Here).  Using new and creative ways to get your music to your fan base (USB drives, t-shirts, treasure hunts) and utilizing social media were stressed by those in the know.  Creating an interactive experience with the buyer should be the ultimate goal of musicians.  With all of the utilities currently available, the one on one fan/artist experience is easier to achieve.

The byproduct of the new methods of reaching and interacting with fans is the steady decline of the traditional album (Something I mentioned in last week’s post:  See White Chocolate and the Soul Berries).  Rolling Stone is picking up on this trend as it is reaching beyond the indies and making headway with some major artists.  In Issue 1090, October 29, 2009, David Browne cited to the death of the traditional album in his article entitled “Artists Break Free of the Album”.  In the article, several artists, including Billy Corgan, Modest Mouse, Sppon, Blitzen Trapper and Radiohead, are testifying to the need and the appeal of a new model for getting music to the masses.  Finally catching up to the public trend (or disease, depending on how you feel) of severe Attention Deficit Disorder, the music industry is coming to the realization that if you are going to get new music out and grab the public’s attention, you better do it quickly and in a new and interesting way.  EP’s are becoming the new LP’s and on-line releases, once deemed leaks, are becoming a cheaper and easier way to reach the entire world and not just the big box store customer. 

The industry insiders and taste makers at CMJ were not necessarily revealing any new or earth shattering information that the informed musician did not already know.  Yet, it is important to realize the significance of the simple fact that these industry and label types are finally catching on to the truth.  If you really needed proof that the industry is not what it once used to be and the old model of releasing a cd, touring, sitting back and living off of royalties is dead, then hearing it from a label owner, label lawyer and label A&R executive is all you hopefully ever need.

blog-deficit-disorder-badd

Did A.D.D. kill the LP?

 

 








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