Your Film May Be More Appealing to Investors if You Start* by the End of the Year
Did you know that for the last seven years, film investors could tax-deduct the entirety of their film investment (up to $20 million), in the same year they made the investment, regardless of whether the film made a profit or loss? This has been possible thanks to IRS Code Section 181, which, according to indieWIRE, is the only federal tax credit available for independent film investors. Section 181 is set to expire at the end of 2011, however, and is not likely to be renewed. So if you’re looking for investment in a film project of yours, and you want to entice investors with this significant deduction, you’ve got a little over two months to get started — and by “get started,” I mean getting your paperwork in order and filming at least one day (thus the reason for the asterisk).
Here’s the word on the four things you must have in place by the end of the year, according to indieWIRE:
- A screenplay. It can be amended at any point thereafter.
- A budget. The budget can later be amended.
- An LLC. You must form and file an LLC for the project and draft all investment documents. Even if you don’t have the prospect of investors, you have to prove you were ready and able to accept them by the end of 2011.
- One day of photography, with dialogue. This must be a scene that’s in the screenplay—but there’s no requirement that it makes the final cut. (Give your attorney production reports that may be filed as proof.)
Once a project has been grandfathered, there’s no time limit to finish the film and the investment qualifies for Section 181 even if you wind up abandoning the project.
I am not a lawyer, and I don’t even play one on TV, so definitely check with your own legal counsel (and read the full article below). Sounds like it’s time to shoot one day of Man-child by the end of the year, however…