The
American Jobs Creation Act Of 2004
The
AJCA created a specific regime for tax incentives
in film production. Here is the text of the section
of the Act which affects film production:
(a)
ELECTION TO TREAT COSTS AS EXPENSES-
(1)
IN GENERAL- A taxpayer may elect to treat the
cost of any qualified film or television production
as an expense which is not chargeable to capital
account. Any cost so treated shall be allowed
as a deduction.
(2)
DOLLAR LIMITATION-
(A)
IN GENERAL- Paragraph (1) shall not apply to any
qualified film or television production the aggregate
cost of which exceeds $15,000,000.
(B)
HIGHER DOLLAR LIMITATION FOR PRODUCTIONS IN CERTAIN
AREAS- In the case of any qualified film or television
production the aggregate cost of which is significantly
incurred in an area eligible for designation as--
(i)
a low-income community under section 45D, or
(ii)
a distressed county or isolated area of distress
by the Delta Regional Authority established under
section 2009aa-1 of title 7, United States Code,
subparagraph
(A) shall be applied by substituting `$20,000,000'
for `$15,000,000'.
(b)
NO OTHER DEDUCTION OR AMORTIZATION DEDUCTION ALLOWABLE-
With respect to the basis of any qualified film
or television production to which an election
is made under subsection (a), no other depreciation
or amortization deduction shall be allowable.
(c)
ELECTION-
(1)
IN GENERAL- An election under this section with
respect to any qualified film or television production
shall be made in such manner as prescribed by
the Secretary and by the due date (including extensions)
for filing the taxpayer's return of tax under
this chapter for the taxable year in which costs
of the production are first incurred.
(2)
REVOCATION OF ELECTION- Any election made under
this section may not be revoked without the consent
of the Secretary.
(d)
QUALIFIED FILM OR TELEVISION PRODUCTION- For purposes
of this section--
(1)
IN GENERAL- The term `qualified film or television
production' means any production described in
paragraph (2) if 75 percent of the total compensation
of the production is qualified compensation.
(2)
PRODUCTION-
(A)
IN GENERAL- A production is described in this
paragraph if such production is property described
in section 168(f)(3). For purposes of a television
series, only the first 44 episodes of such series
may be taken into account.
(B)
EXCEPTION- A production is not described in this
paragraph if records are required under section
2257 of title 18, United States Code, to be maintained
with respect to any performer in such production.
(3)
QUALIFIED COMPENSATION- For purposes of paragraph
(1)--
(A)
IN GENERAL- The term `qualified compensation'
means compensation for services performed in the
United States by actors, directors, producers,
and other relevant production personnel.
(B)
PARTICIPATIONS AND RESIDUALS EXCLUDED- The term
`compensation' does not include participations
and residuals (as defined in section 167(g)(7)(B)).
(e)
APPLICATION OF CERTAIN OTHER RULES- For purposes
of this section, rules similar to the rules of
subsections (b)(2) and (c)(4) of section 194 shall
apply.
(f)
TERMINATION- This section shall not apply to qualified
film and television productions commencing after
December 31, 2008.'.
(b)
CONFORMING AMENDMENT- The table of sections for
part VI of subchapter B of chapter 1 is amended
by inserting after the item relating to section
180 the following new item:
`Sec. 181. Treatment of certain qualified film
and television productions.'.
(c) EFFECTIVE DATE- The amendments made by this
section shall apply to qualified film and television
productions (as defined in section 181(d)(1) of
the Internal Revenue Code of 1986, as added by
this section) commencing after the date of the
enactment of this Act.
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