Among the provisions of the Bipartisan Budget Act of 2018 passed by Congress and signed by the President on February 9 is a retroactive extension of Internal Revenue Code Section 181. Prior to passage of the Budget Act, Section 181 permitted an immediate tax deduction of production costs for US film, TV or live stage productions as incurred, subject to certain limits on the amount of production costs that were deductible and to making an election under Section 181, but only if the production started on or before Dec. 31, 2016. Production costs for a production that started on or after January 1, 2017 were not eligible for an immediate tax deduction after the law expired on Dec. 31, 2016. The Budget Act retroactively restores the deductibility of production costs with respect to any such project that began in 2017.
This is different from the provisions in the Tax Cuts and Jobs Act affecting the deductibility of qualified film, TV and live stage production costs (which we recently wrote about here). The Tax Cuts and Jobs Act made changes to the immediate deduction of such costs incurred after September 27, 2017 with respect to productions placed in service after that date.
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