The Internal Revenue Service has issued final regulations for tax deductions on domestic film productions, while revising the definition of the types of films that qualify for the deduction.
The deduction is for income attributable to domestic production activities under Section 199 of the Tax Code. The final regulations revise some of the rules and examples relating to the definitions of a qualified film and affect taxpayers who produce qualified films and taxpayers who are members of expanded affiliated groups.
The term "qualified film" means any motion picture film or video tape, or live or delayed television programming, if not less than 50 percent of the total compensation relating to the production of such film is compensation for services performed in the United States by actors, production personnel, directors and producers.
The term "actors" can include players, newscasters or any other persons who are compensated for their performance or appearance in a film. The term "production personnel" includes writers, choreographers and composers who are compensated for providing services during the production of a film, as well as casting agents, camera operators, set designers, lighting technicians, make-up artists, and other persons who are compensated for providing services that are directly related to the production of the film.
A Treasury Department decision also revises the "by the taxpayer" compensation fraction for determining a not-less-than-50-percent-of-the-total-compensation requirement. The numerator of the revised fraction is the compensation for services performed in the United States and the denominator is the total compensation for services regardless of where the production activities are performed.