Many people assumed the Film Tax Deductions that expired back in 2016 may never return, but, the new Section 181 Tax Deduction was passed as part of the Tax Cut sand Jobs Act of 2018, which is great news for anyone looking for private investor financing for a feature film, television series or a live stage production.

 Since the purpose of the old Section 181 Tax Deductions was to create tax incentive for investors involved in entertainment productions made in the United States, likewise, the new version creates 100% deduction for any money invested in a film,television series or stage production that is produced in the US, and qualifies under the original qualification standards of Section 181.

This means, for every $1.00 invested in a film or a television series, the investor can write-off 37 cents from their tax return. Like the original, the new Section 181 Tax Deductions can be taken when a producer sets up a qualifying securities offering, in which the private placement memorandum (PPM) and other provisions of the securities offering have been drafted by a recognized entertainment lawyer in Los Angeles, San Francisco and New York, like ourselves, to incorporate the new depreciation rules found in the 2018 version of Section 181 Tax Deductions of TCJA.

Investors that are subject to United States federal income tax can benefit from the new Section 181 Tax Deduction under the Tax Cuts and Jobs Act 2018.

As Section 181 Film Tax Deduction expired at the end of 2016, many assumed it would never return, until the new Section 181 of the Tax Cuts and Jobs Act emerged with same benefits specifically referencing the original Section 181 Tax Deduction.

Though it is based on the premise of the original text, the new Section 181 Film Tax Deduction is different in a couple of ways that make it even better for investors and producers.

To begin with, there is no cap to the Section 181 Deduction any longer, and even projects budgeted over $15 million can take advantage of the deduction.Although all producers and investors can benefits from it with the help of an entertainment law firm in New York, Los Angeles, and San Francisco, the studios and networks might be the biggest beneficiaries of the deductions,as every film and television series produced in the United States for the next 5 years will be able to take advantage,if the production qualifies under the original qualification standards of Section 181.

The way that the deduction is taken by the production company is now different as well, and rather taken as an expense, it is a form of depreciation. The provisions are complicated for anyone but,the top entertainment attorney in Los Angeles, New York, and San Francisco,like us,who is familiar with the tax law, to create the same benefit for investors as under the original Section 181 Tax Deduction.

Finally, there are no special-zones where certain geographic areas get a higher-cap anymore since the cap has been removed altogether, benefiting investors and producers.

Of the many issues top entertainment law firms in Los Angeles, San Francisco and New York like us assist with, the two I will focus regarding rights are, the idea of ‘derivative work’, and the US Copyright Act requirement for a ‘signed writing’.
In film and television we usually talk about
1) the “underlying work,” such as a book, short story, comic book, etc.,
2) the script, and
3) the film or television production itself.
Not based on previous work, the ‘underlying work’ is considered to be original, and is copyrighted solely in the name of theauthor(s) or the company that commissioned it.Each subsequent work based on the original are ‘derivative works’, and therefore must be licensed from the original author(s).
If a script is based on a story, then the script is a ‘derivative work’, and your rewrite of the script is a derivative of a ‘derivative work’. To proceed, you would need to license the rights, with the help of an entertainment attorney, Los Angeles based, from both the original and the first script authors.
Coming to the second issue, the Copyright Act specifies that a ‘signed writing’ is needed to transfer rights, without providing any specific template. Electronic communication has brought issues regarding ‘signing’, too.The federal ESIGN Act clarifies this, making it a federal law, that digital signatures are considered to be as binding as paper signatures.
Often times, emails are ‘signed’ by the sending party, but they can be altered, which raises concern. Similarly, text messages, Facebook and Twitter posts areconsidered signed writing in some ways, but not expected to be formal contacts by the parties sending them.
The best advice is to be cautious, and never rely on an email or text message to be final disposition of the underlying rights. Every project has the potential to become valuable in the future. Have a formal contract drafted, or have an existing reviewed by the best entertainment lawyers in Los Angeles or New York like ours. It is not just the transfer of rights and the division of royalties and profits, but there are other legal issues that should be taken into account as part of a rights agreement.