Film Accounting Glossary
Section 181
What is Section 181?
Also called Sec 181, or IRC 181.
Section 181 is the U.S. tax provision that allowed qualifying film and television production costs to be deducted in the year incurred rather than capitalized and amortized.
It has lapsed and been reinstated repeatedly, and bonus depreciation under Section 168(k) has served a similar function for productions in recent years. Because the availability and terms change with each tax act, any production relying on it should confirm current law with counsel rather than precedent.
Example
Section 181 has lapsed and been reinstated repeatedly, and bonus depreciation under Section 168(k) has covered similar ground for productions in recent years. Any structure relying on either should be confirmed against current law rather than a precedent deal from three years ago.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Tax structuring at the entity level, handled by counsel and the production's tax advisers rather than by the production accountant.
Common mistake
Relying on a structure that worked on a previous picture. Section 181 has lapsed and been reinstated repeatedly, so current law has to be confirmed each time.
Related questions
- Is Section 181 still available?
- Its availability has changed repeatedly with successive tax acts, and bonus depreciation under Section 168(k) has covered similar ground. Confirm current law with counsel.
- What did Section 181 allow?
- Qualifying film and television production costs to be deducted in the year incurred rather than capitalized and amortized against future revenue.