Tax Law Blog

Federal Tax Incentive for Film Production Expires

You may remember that in July 2015, Governor Snyder signed legislation bringing to an end Michigan’s controversial film incentive program. Another incentive program for film investors - this one embedded in the federal tax code - recently expired by its own terms on December 31st.

Prior to its expiration, Section 181 allowed investors to deduct 100 percent of their investment against their federal taxes in the year of the investment, as opposed to depreciating that investment over an extended period of time.

Section 181 was first implemented as part of 2004’s American Jobs Creation Act under President George W. Bush. It was created as a response to more film production moving to countries that offered film incentives. It has lapsed before, but it has always been resurrected. For example, it expired at the end of 2014, but then was brought back approximately 12 months later and made retroactive for the whole year.

Only time will tell if the Section 181 incentives will be renewed. But in light of reports that President Donald Trump is going to pursue deep cuts to federal spending, it seems less likely that filmmakers will be able to rely on this tax break. In the meantime, the entertainment industry will have to look at various state incentives when considering where to set up production.

We will continue to keep you updated about any new developments concerning Section 181. If you have any questions, please contact a Foster Swift tax attorney.

Categories: Tax