Fiscal cliff deal includes added tax deductions for Hollywood film productions
Hollywood studios enjoyed their best year ever at domestic box offices in 2012, but lawmakers in Washington gave movie and TV investors need a sweet tax deduction to keep the cameras rolling in the U.S.
photo Jon Sullivan
Deadline reports Wednesday that the new fiscal cliff deal “includes a provision enabling investors in productions shot in the U.S. to deduct the first $15M of the costs or $20M if the shooting takes place in low-income areas.”
Section 181 of the Internal Revenue Code, they can take the entire deduction in the first year instead of spreading it over several years, and can combine it with state tax credits.
It began with the American Jobs Creation Act of 2004 and in 2008 was amended and extended to the end of 2011.
Supporters were led by Representatives Howard Berman (D-Calif.) and David Dreier (R-Calif.), who say that other industries enjoy tax breaks that don’t apply to Hollywood, and that the deductions are needed to counteract incentives that other countries offer to shoot movies and TV shows abroad.
MPAA spokesperson Kate Bedingfield says that the film and TV industry “has been a significant contributor to growth in our economy”, employing 2.1M workers with $137B in wages. “A strong American film industry contributes to a strong American economy.”
