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Tax Benefits

 

Dec 18, 2015, Congress approved a spending package that include a provision to help filmmakers, by renewing the Sect 181 Federal Film Tax Incentive, which expired on December 31, 2016. The code allows investors to deduct their investment against passive income as soon as the film breaks escrow, then later claim any returns as income in future year (limited by passive income rules). There are limitations and a potential investor should consult their own tax adviser.  MegaBall$ complies with the requirements of the film: 75% must be for paid service in the US, and our project is 100%, and has qualified to be grandfathered in. Even thought Sect 181 has sunsetted, investors in MegaBall$retain the tax advantage since the project has grandfathered in the benefit.

Here are a few links to read more about Sect 181 and the tax implications:

Variety
Marc Jacobson (Entertainment Lawyer) Tax Implications of 181

Sect 181 Explained
HuffingtonPost
Filmmaker Magazine

But wait – there’s more!

Effective January 1, 2018, there are two more film-TV-stage tax incentives: Sect. 168 allows the investor a 100% depreciation loss/deduction in the year the project is placed into service (the year the film is first shown) – as opposed to the 181 benefit. Sect 199a provides a 20% discount on taxable income returned to the investor. For example, for every taxable one dollar returned to the investor, the investor pays tax on 80 cents.

But wait – there’s still more!

In New York State there film incentive rebate, returning 30% of qualified spending, which in the case of MegaBall$, would be slightly over $500,000. When combining the benefits of the NYS rebate and Sect 181 (or 168), the investor has a greatly reduced financial risk.  It is strongly recommended that investors review the potential tax benefit with their advisers.

 

 

An comedy feature film, written by Marc Baron ©; developed by Oroloro Entertainment