Fools by Martin Walker

Tuesday, March 18, 2008

Tax Incentives for Film Investors, Pt. II

As I noted in a prior post, there are possible tax benefits for film investors under Section 181 of the tax code.  (Now, if I was trying to write a legal memo, I would use the correct cite, but I will refrain here.)  I met with a CPA recently to discuss this rule, and it appears that Section 181 is definitely available for this tax year.  (Again, my disclaimer: I am not a tax attorney nor have I ever wanted to be a tax attorney nor have I ever wanted to date anyone who is a tax attorney.  This blog is not meant to be tax advice.  You will need to consult with your own tax advisor.)  The main benefit of this rule is for film investors who are also "active investors" in the production entity, who would be able to deduct their investment against ordinary income.  "Passive investors" will only be able to deduct their investment as a passive loss against passive income, in the year when a loss is recognized.  Since we formed an LLC as the production entity, the LLC will need to file its own tax return, and in turn, "pass-through" the production expenses to the individual investors.  Sec. 181 can be extremely beneficial for filmmakers who have invested in their own films.  This of course assumes that struggling filmmakers have other income to offset their losses.  That is another topic for another day.




No comments:

About The Three Shorts

Christine Le wrote and directed the 1st story Love 10 to 1.
The first story explores the life of a 29-year-old virgin, Jenny, who desperately wants to lose her virginity before her 30th birthday. As she encounters one loser after another on dates, Jenny pines after her boss, Dustin. While at her grandmother’s retirement home, Jenny learns a powerful lesson from her grandmother about sex and the meaning of life.


Christine Le (right) directs Shireen Nomura Mui (Jenny) & Justin Klosky (Jim).

Lucy Rodriguez wrote and directed Love Song.
The second story revolves around Shane, the lead singer of the L.A. rock band, Dirty Virgin. Shane has her pick of admirers but it’s her roommate Dustin she wants to be with. Shane confesses her feelings on Jackie and Jared’s show but when Dustin meets Cali, Shane’s shot at love starts to dwindle. With Dirty Virgin about to embark on a world tour, will Dustin realize that he’s the object of Shane’s affections? Will they risk their friendship to give this Love Song a chance?


Lucy Rodriguez & David Villar (Dustin)

Laura Somers wrote and directed Diving Lessons.
The final story picks up where Love 10 to 1 left off, but from the perspective of Jim, the guitarist of Dirty Virgin. Jim sees Jenny at a swimming pool, trying desperately to overcome her fear of diving. In fact, he finds out that she’s making a list of everything that she’s afraid of and trying to overcome them, one by one. He is instantly smitten and tries to convince her that he’s not just a rock star who ‘loves ‘em and leaves ‘em’. Can a rock star find love with a virgin?


Shireen Nomura-Mui, Laura Somers & Justin Klosky




Leah Anova is the Director of Photography for Love 10 to 1 & Diving Lessons.

Additional Cinematography on Diving Lessons by Erik Forsell

Matthew Boyd is the Director of Photography for Love Song.