More on Section 181
July 1, 2013 Leave a comment
A student from New York had some very good questions about how to apply Section 181. I thought that I would share her questions, and my answers.
- I would definitely like to learn more details on how to actually “pass-through tax credits” to our investor group; as opposed to getting a check from the state and signing it over to our investor.
- Also, getting the particulars on how Sec. 181 tax benefit actually gets to the investor; how do they claim it on their taxes.
- Title Holder, LLC
- Production Co. LLC
“Q: What tax form do I need to fill out to get the incentive?
A: Currently, there is no specific form to fill out. The IRS temporary regulations require that you declare in a separate statement that you are electing to utilize Section 181. The legislative history also states that: “deducting qualifying costs on the appropriate tax return shall constitute a valid election.” Therefore, deducting the production costs (that would otherwise be capitalized) on your tax return will qualify as electing to take advantage of this incentive.”
“In the case of a film co-produced by multiple investors, the deduction for qualifying expenditures must be allocated among the owners of the film in a manner that reasonably reflects each owner’s proportionate investment and economic interest in the film.”