Athena.Trade Presents Film Financing Nuances with Rubenstein Business Law’s Hal “Corky”Kessler

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Athena.Trade

5 min readDec 18, 2019

Understanding the Federal Tax Incentives for Investors in Film

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Athena.Trade Presents December 18, 2019

Athena.Trade Presents: Please join us on December 18, 2019 at 2pm at 211 W. Wacker, Chicago, for a presentation from our friend from Rubenstein Business Law, Hal “Corky” Kessler, who will speak on the avenues investors may use to offset their diverse Federal tax obligations via film investment utilizing the “Tax Cuts and Jobs Act” of 2017. [2][6] Mr. Rubenstein’s full article is quoted below. No stranger to the film and financing industries, in 2019, he was notably awarded a ‘Life Time Achievement Award’, by the Producer’s Choice, where he was dubbed the ‘Best Entertainment Lawyer & Executive Producer in the United States.’ Mr. Rubenstein also teaches Entertainment & Transactional Law at John Marshal Law School, University of Illinois at Chicago (UIC), Chicago’s only public law school. [1][2][3][4][5]

As 2019 draws to a close, we look forward to this informative discussion and questions are welcome. Please feel free to join us in person -RSVP here, or online via Periscope/Twitter. www.Twitter.com/athena_trade.

Athena.Trade @Athena_Trade

We are live here at @Athena_Trade with Mr. Corky Rubenstein, who is discussing #FilmFinancing and #tax #incentives.…

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The Producer’s Choice will also host an event in Park City, Utah, during the Sundance Film Festival, more information can be found here.

Runaway Production: Myth and Reality

By: Hal “Corky” Kessler

“The “Tax Cuts and Jobs Act” of 2017 (the “Act”), which takes effect January 1, 2018, includes two new incentives for Film, Television and Theater. These incentives were included to help all Film, Television and Theater projects to secure United States investors who would benefit by investing.
Prior to January 1, 2018, if a Film, Television or Theater project began and satisfied the rules and regulations under Section 181 of the American Jobs Act of 2004, as extended from time to time, you could use the benefits provided under Section 181 subject to limitations, conditions and rules. Those benefits however ceased to be available after January 1, 2017. In December of 2017, just before Christmas, President Trump signed into law the “Tax Cuts and Jobs Act”. The Act provides two separate benefits for Film, Television and Theater: However, Section 181 has since been extended to end on January 1, 2018.
Section 168 of the tax code as amended now provides economic incentives for Film, Television and Theater. Investors can now have 100% deduction in the year each it is placed in service. This applies to projects put into service beginning September 27, 2017, and continues through 2022. It also may not be subject to the alternate minimum tax (AMT). You should check with your accountant regarding this. “Placed in service” means the year in which a Film is first shown, a Television show is first aired, or a theatrical project opens. The incentive provides 100% loss and does not matter how much the production budget of each is or whether the investors are active or passive. All investors would get the same 100% deprecation (loss). However, the time frame under which you take the loss might vary depending whether you are active or passive. You are limited in amount you can write off on W-2 wages, dividends and capital gains. If you file jointly the maximum is $500,000.00. If filled individually at $250,000. You can carry other losses forward for 21 years. If you have business income from ownerships in business or business of sale or 1099 income, you can write off the amount of any or all business income up to the amount invested. Any remaining loss can be carried forward for 21 years.
Section 199 provided a nine percent (9%) deduction on all taxable income returned to investors. For example, if one dollar is returned and taxable to any investor as the investor pays tax on 91 cents. Under the Act Section 199 is amended under Section 199A and now provides a twenty percent (20%) deduction on taxable income returned to investors. Thus, if one dollar of taxable income is refunded to any investor, the investor pays tax on 80 cents. However, this deduction is subject to limits and rules and you should check with your tax advisors and consultants regarding the application of 199A.
The Good News.
Additional good news for independent filmmakers is that the benefits of the Act can be combined with any state film or television incentive programs. Currently, over 40 states have incentive programs available to film and/or television production projects.
Producers, their attorneys, and their tax advisers should evaluate projects to determine which state has the best incentives for them to add to those contained in the Act. Despite some of the confusion surrounding the Act, it is a highly beneficial law for independent producers in Film, Television and Theater and can help put a serious dent into runaway productions.”

About Athena.trade

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