I.R.C. § 181(a) Election To Treat Costs As Expenses
I.R.C. § 181(a)(1) In General —
A taxpayer may elect to treat the cost of any qualified film or television production,
and any qualified live theatrical production, as an expense which is not chargeable
to capital account. Any cost so treated shall be allowed as a deduction.
I.R.C. § 181(a)(2) Dollar Limitation
I.R.C. § 181(a)(2)(A) In General —
Paragraph (1) shall not apply to so much of the aggregate cost of any qualified film or television
production or any qualified live theatrical production as exceeds $15,000,000.
I.R.C. § 181(a)(2)(B) Higher Dollar Limitation For Productions In Certain Areas —
In the case of any qualified film or television production or any qualified live
theatrical production the aggregate cost of which is significantly incurred in an
area eligible for designation as—
I.R.C. § 181(a)(2)(B)(i) —
a low-income community under section 45D, or
I.R.C. § 181(a)(2)(B)(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”.
I.R.C. § 181(b) No Other Deduction Or Amortization Deduction Allowable —
With respect to the basis of any qualified film or television production or any qualified
live theatrical production to which an election is made under subsection (a), no other depreciation or amortization deduction shall be allowable.
I.R.C. § 181(c) Election
I.R.C. § 181(c)(1) In General —
An election under this section with respect to any qualified film or television
production or any qualified live theatrical 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.
I.R.C. § 181(c)(2) Revocation Of Election —
Any election made under this section may not be revoked without the consent of the
Secretary.
I.R.C. § 181(d) Qualified Film Or Television Production —
For purposes of this section—
I.R.C. § 181(d)(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.
I.R.C. § 181(d)(2) Production
I.R.C. § 181(d)(2)(A) In General —
A production is described in this paragraph if such production is property described
in section 168(f)(3).
I.R.C. § 181(d)(2)(B) Special Rules For Television Series —
In the case of a television series—
I.R.C. § 181(d)(2)(B)(i) —
each episode of such series shall be treated as a separate production, and
I.R.C. § 181(d)(2)(B)(ii) —
only the first 44 episodes of such series shall be taken into account.
I.R.C. § 181(d)(2)(C) 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.
I.R.C. § 181(d)(3) Qualified Compensation —
For purposes of paragraph (1)—
I.R.C. § 181(d)(3)(A) In General —
The term “qualified compensation” means compensation for services performed
in the United States by actors, production personnel, directors, and producers.
I.R.C. § 181(d)(3)(B) Participations And Residuals Excluded —
The term “compensation” does not include participations and residuals
(as defined in section 167(g)(7)(B)).
I.R.C. § 181(e) Qualified Live Theatrical Production —
For purposes of this section—
I.R.C. § 181(e)(1) In General —
The term “qualified live theatrical production”
means any production described in paragraph (2) if 75 percent of the total compensation of the production is qualified compensation
(as defined in subsection (d)(3)).
I.R.C. § 181(e)(2) Production
I.R.C. § 181(e)(2)(A) In General —
A production is described in this paragraph if such production is a live staged production
of a play (with or without music) which is derived from a written book or script and
is produced or presented by a taxable entity in any venue which has an audience capacity
of not more than 3,000 or a series of venues the majority of which have an audience
capacity of not more than 3,000.
I.R.C. § 181(e)(2)(B) Touring Companies, Etc. —
In the case of multiple live staged productions—
I.R.C. § 181(e)(2)(B)(i) —
for which the election under this section would be allowable to the same taxpayer,
and
I.R.C. § 181(e)(2)(B)(ii) —
which are—
I.R.C. § 181(e)(2)(B)(ii)(i) —
separate phases of a production, or
I.R.C. § 181(e)(2)(B)(ii)(II) —
separate simultaneous stagings of the same production in different geographical locations
(not including multiple performance locations of any one touring production),
each such live staged production shall be treated as a separate production.
I.R.C. § 181(e)(2)(C) Phase —
For purposes of subparagraph (B), the term “phase”
with respect to any qualified live theatrical production refers to each of the following,
but only if each of the following is treated by the taxpayer as a separate activity
for all purposes of this title:
I.R.C. § 181(e)(2)(C)(i) —
The initial staging of a live theatrical production.
I.R.C. § 181(e)(2)(C)(ii) —
Subsequent additional stagings or touring of such production which are produced by
the same producer as the initial staging.
I.R.C. § 181(e)(2)(D) Seasonal Productions
I.R.C. § 181(e)(2)(D)(i) In General —
In the case of a live staged production not described in subparagraph (B) which is produced or presented by a taxable entity for not more than 10 weeks of
the taxable year, subparagraph (A) shall be applied by substituting “6,500”
for “3,000”.
I.R.C. § 181(e)(2)(D)(ii) Short Taxable Years —
For purposes of clause (i), in the case of any taxable year of less than 12 months, the number of weeks for
which a production is produced or presented shall be annualized by multiplying the
number of weeks the production is produced or presented during such taxable year by
12 and dividing the result by the number of months in such taxable year.
I.R.C. § 181(e)(2)(E) Exception —
A production is not described in this paragraph if such production includes or consists
of any performance of conduct described in section 2257(h)(1) of title 18, United
States Code.
I.R.C. § 181(f) Application Of Certain Other Rules —
I.R.C. § 181(g) Termination —
This section shall not apply to qualified film and television productions or qualified
live theatrical productions commencing after December 31, 2017.
(Added by Pub. L. 108-357, title II, Sec. 244(a), Oct. 22, 2004, 118 Stat. 1418; amended by Pub. L. 109-135, title IV, Sec.
403(e)(1), Dec. 21, 2005, 119 Stat. 2577; Pub. L. 110-343, div. C, title V, Sec. 502, Oct. 3, 2008, 122 Stat. 3765; Pub. L. 111-312, Sec. 744, Dec. 17. 2010, 124 Stat. 3296; Pub. L. 112-240, title III, Sec. 317, Jan. 2, 2013, 126 Stat. 2313; Pub. L. 113-295, Div. A, title I, Sec. 129(a), Dec. 19, 2014, 128 Stat. 4010; Pub. L. 114-113, Div. Q, title I, Sec. 169, Dec. 18, 2015; Pub. L. 115-123, Div. D, title I, Sec. 40308(a), Feb. 9, 2018, 132 Stat 64.)
BACKGROUND NOTES
AMENDMENTS
2018 - Subsec. (g). Pub. L. 115-123, Sec. 40308(a), amended subsec. (g) by substituting “December 31, 2017”
for “December 31, 2016.”
2015 - Pub. L. 114-113, Div. Q, Sec. 169(b)(2)(C), amended the heading for Sec. 181 by inserting “AND
LIVE THEATRICAL” after “FILM AND TELEVISION”.
Subsec. (a)(1). Pub. L. 114-113, Div. Q, Sec. 169(b)(1), amended par. (1) by inserting “, and any qualified
live theatrical production,”
after “any qualified film or television production”.
Subsec. (a)(2). Pub. L. 114-113, Div. Q, Sec. 169(b)(2)(A), amended par. (2)
by inserting “or any qualified live theatrical production”
after “qualified film or television production” each place it appeared.
Subsec. (b). Pub. L. 114-113, Div. Q, Sec. 169(b)(2)(A), amended subsec. (b)
by inserting “or any qualified live theatrical production”
after “qualified film or television production” each place it appeared.
Subsec. (c)(1). Pub. L. 114-113, Div. Q, Sec. 169(b)(2)(A), amended par. (1)
by inserting “or any qualified live theatrical production”
after “qualified film or television production” each place it appeared.
Subsec. (f). Pub. 114-113 Div. Q, Sec. 169(a), amended subsec. (f) by substituting
“December 31, 2016”
for “December 31, 2014”.
Subsec. (f). Pub. L. 114-113, Div. Q, Sec. 169(b)(2)(B), amended subsec. (f)
by inserting “or qualified live theatrical productions”
after “qualified film or televisions productions”.
Subsec. (e)-(g). Pub. L. 114-113, Div. Q, Sec. 169(c), redesignating subsec. (e)
and (f) as subsec. (f) and (g), respectively, and added a new subsec.
(e).
2014 - Subsec. (f). Pub. L. 113-295, Sec. 129(a), amended subsec. (f) by substituting “December 31, 2014”
for “December 31, 2013”.
2013 - Subsec. (f). Pub. L. 112-240, Sec. 317(a), amended subsec. (f) by substituting “December 31, 2013”
for “December 31, 2011”.
2010 - Subsec. (f). Pub. L. 111-312, Sec. 744(a), amended subsec. (f) by substituting “December 31, 2011”
for “December 31, 2009”.
2008 - Subsec. (a)(2)(A). Pub. L. 110-343, Div. C, Sec. 502(b), amended subpar. (A). Before amendment it read as follows:
“(A) In General.— Paragraph (1) shall not apply to any qualified film
or television production the aggregate cost of which exceeds $15,000,000.”
Subsec. (d)(3)(A). Pub. L. 110-343, Div. C, Sec. 502(d), amended subpar.
(A) by substituting “actors, production personnel, directors, and producers”
for “actors, directors, producers, and other relevant production personnel.”.
Subsec. (f). Pub. L. 110-343, Div. C, Sec. 502(a), amended subsec.
(f) by substituting “December 31, 2009” for “December 31, 2008”.
2005 - Subsec. (d)(2)(A). Pub. L. 109-135, Sec. 403(e)(1), amended subpar. (A) by striking the last sentence. Before being struck, it read
as follows: “For purposes of a television series, only the first 44 episodes
of such series may be taken into account.”
Subsec. (d)(2)(B)-(C). Pub. L. 109-135, Sec. 403(e)(1), amended par. (2) by redesignating subpar. (B) as subpar. (C) and added a new subpar.
(B).
EFFECTIVE DATE OF 2018 AMENDMENT
Amendment by Pub. L. 115-123, Sec. 40308(a), effective for productions commencing after December 31, 2016.
EFFECTIVE DATE OF 2015 AMENDMENTS
Amendments by Pub. L. 114-113, Div. Q, Sec. 169(a), effective for productions commencing after December 31, 2014.
Amendments by Pub. L. 114-113, Div. Q, Sec. 169(b) and (c), effective for productions commencing after December
31, 2015.
Sec. 169(d)(2)(B) of Pub. L. 114-113, Div. Q, provided the following:
“(2)(B) COMMENCEMENT.—For purposes of subparagraph (A), the date on which
a qualified live theatrical production commences is the date of the first public performance
of such production for a paying audience.”
EFFECTIVE DATE OF 2014 AMENDMENT
Amendment by Sec. 129 of Pub. L. 113-295 effective for productions commencing after December 31, 2013.
EFFECTIVE DATE OF 2013 AMENDMENT
Amendment by Sec. 317 of Pub. L. 112-240 effective for productions commencing after December 31, 2011.
EFFECTIVE DATE OF 2010 AMENDMENT
Amendment by Sec. 744 of Pub. L. 111-312 effective for productions commencing after December 31, 2009.
EFFECTIVE DATE OF 2008 AMENDMENTS
Amendments by Div. C, Sec. 502 of Pub. L. 110-343 effective for qualified film and television productions commencing after December
31, 2007.
EFFECTIVE DATE OF 2005 AMENDMENTS
Amendments by Sec. 403(e)(1) of Pub. L. 109-135 effective as if included in the provisions of the American Jobs Creation Act of 2004
[Pub. L. 108-358, Sec. 244] to which they relate.
EFFECTIVE DATE
Effective for qualified film and television productions
(as defined in section 181(d)(1) of the Internal Revenue Code of 1986, as added by Sec. 244 of Pub. L. 108-357) commencing after the date of the enactment of this Act [Enacted: Oct. 22, 2004].
