By Tom McClimon
October 18, 2004

A provision in the recent corporate tax bill passed by Congress provides relief to film and television producers to encourage film and television production in the United States. Runaway film production relief has been a priority of the Conference of Mayors and the mayors have passed resolutions in support of it.

Under a provision in the bill, a category of film and television productions, which are most likely to runaway to other countries, would be eligible for a tax incentive program. Under this program, the cost of production of qualifying films would be permitted to be immediately expensed — that is fully deducted from income for tax purposes — in the year expenditures occur. This would be in contrast to current law, where the cost of producing the film is usually recovered over a period of several years. This ability to immediately deduct costs from income will serve as a means of attracting investment capital into production where a portion of the tax benefits will flow through to reduce the cost of production.

The proposal applies only to qualifying film or television productions the aggregate cost of which does not exceed $15 million.

A higher expenditure cap of $20 million would apply to production located in areas eligible for designation as a low-income community or eligible for designation by the Delta Regional Authority as a distressed county or isolated area of distress.

To qualify, at least 75 percent of the compensation expended on the production must be for services performed in the United States.