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 email@example.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.