[Federal Register Volume 77, Number 236 (Friday, December 7, 2012)]
[Rules and Regulations]
[Pages 72923-72924]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29630]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9603]
RIN 1545-BJ23
Deduction for Qualified Film and Television Production Costs
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations and removal of temporary regulations.
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SUMMARY: This document contains final regulations relating to
deductions for the cost of producing qualified film and television
productions. These final regulations reflect changes to the law made by
the Tax Extenders and Alternative Minimum Tax Relief Act of 2008 and
affect taxpayers that produce films and television productions within
the United States.
DATES: Effective Date: These regulations are effective on December 7,
2012.
Applicability Dates: For dates of applicability, see Sec. 1.181-6.
FOR FURTHER INFORMATION CONTACT: Bernard P. Harvey, (202) 622-4930 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains final regulations that amend 26 CFR part 1
to reflect amendments made to section 181 of the Internal Revenue Code
of 1986 (Code) by section 502 of the Tax Extenders and Alternative
Minimum Tax Relief Act of 2008, Public Law 110-343 (122 Stat. 3765)
(October 3, 2008).
On October 19, 2011, the IRS and the Treasury Department published
in the Federal Register (TD 9552, 76 FR 64816) temporary regulations
amending the rules under section 181 for deductions relating to the
cost of producing qualified film and television productions to reflect
section 502 of the Tax Extenders and Alternative Minimum Tax Relief Act
of 2008. A notice of proposed rulemaking (REG-146297-09) cross-
referencing the temporary regulations was published in the Federal
Register (76 FR 64879) on the same day. No comments were received from
the public in response to the notice of proposed rulemaking. No public
hearing was requested or held. The proposed regulations under section
181 are adopted by this Treasury decision and the corresponding
temporary regulations are removed.
Effective/Applicability Date
These final regulations apply to qualified film and television
productions to which section 181 is applicable and for which the first
day of principal photography or in-between animation occurs on or after
December 7, 2012. The owner of a qualified film or television
production may apply the final regulations to productions to which
section 181 applies and for which principal photography or, for an
animated production, in-between animation commenced before December 7,
2012.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866, as
supplemented by Executive Order 13563. Therefore, a regulatory
assessment is not required. It also has been determined that section
553(b) and (d) of the Administrative Procedure Act (5 U.S.C. chapter 5)
does not apply to these regulations. Because the regulations do not
impose a collection of information on small entities, the Regulatory
Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to
section 7805(f) of the Code, the notice of proposed rulemaking that
preceded these final regulations was submitted to the Chief Counsel for
Advocacy of the Small Business Administration for comment on its impact
on small business, and no comments were received.
Drafting Information
The principal author of these regulations is Bernard P. Harvey,
Office of Associate Chief Counsel (Income Tax and Accounting). However,
other personnel from the IRS and the Treasury Department participated
in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR part 1 is amended as follows:
[[Page 72924]]
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 1.181-0 is amended by:
0
1. Adding the entries for Sec. 1.181-1 paragraphs (a)(6), (b)(1)(ii)
and (c)(2).
0
2. Revising the entry for Sec. 1.181-6 paragraph (b) and removing
paragraph (c).
The revision and additions to read as follows:
Sec. 1.181-0 Table of contents.
* * * * *
Sec. 1.181-1 Deduction for qualified film and television production
costs.
(a) * * *
(6) Post-amendment production.
* * * * *
(b) * * *
(1) * * *
(ii) Post-amendment production.
* * * * *
(c) * * *
(2) Post-amendment production.
* * * * *
Sec. 1.181-6 Effective/applicability date.
* * * * *
(b) Pre-effective date productions.
Sec. 1.181-0T [Removed]
0
Par. 3. Section 1.181-0T is removed.
0
Par. 4. Section 1.181-1 is amended by revising paragraphs (a)(1)(ii),
(a)(6), (b)(1)(ii), (b)(2)(vi), and (c)(2) to read as follows:
Sec. 1.181-1 Deduction for qualified film and television production
costs.
(a) * * * (1) * * *
(ii) This section provides rules for determining the owner of a
production, the production costs (as defined in paragraph (a)(3) of
this section), the maximum amount of aggregate production costs (as
defined in paragraph (a)(4) of this section) that may be paid or
incurred for a pre-amendment production (as defined in paragraph (a)(5)
of this section) for which the owner makes an election under section
181, and the maximum amount of aggregate production costs that may be
claimed as a deduction for a post-amendment production (as defined in
paragraph (a)(6) of this section) for which the owner makes an election
under section 181. Section 1.181-2 provides rules for making the
election under section 181. Section 1.181-3 provides definitions and
rules concerning qualified film and television productions. Section
1.181-4 provides special rules, including rules for recapture of the
deduction. Section 1.181-5 provides examples of the application of
Sec. Sec. 1.181-1 through 1.181-4, while Sec. 1.181-6 provides the
effective date of Sec. Sec. 1.181-1 through 1.181-5.
* * * * *
(6) Post-amendment production. The term post-amendment production
means a qualified film or television production commencing on or after
January 1, 2008.
* * * * *
(b) * * * (1) * * *
(ii) Post-amendment production. Section 181 permits a deduction for
the first $15,000,000 (or, if applicable under paragraph (b)(2) of this
section, $20,000,000) of the aggregate production costs of any post-
amendment production.
* * * * *
(2) * * *
(vi) Allocation. Solely for purposes of determining whether a
production qualifies for the higher production cost limit (for pre-
amendment productions) or deduction limit (for post-amendment
productions) provided under this paragraph (b)(2), compensation to
actors (as defined in Sec. 1.181-3(f)(1)), directors, producers, and
other relevant production personnel (as defined in Sec. 1.181-3
(f)(2)) is allocated entirely to first-unit principal photography.
* * * * *
(c) * * *
(2) Post-amendment production. Amounts not allowable as a deduction
under section 181 for a post-amendment production may be deducted under
any other applicable provision of the Code.
Sec. 1.181-1T [Removed]
0
Par. 5. Section 1.181-1T is removed.
0
Par. 6. Section 1.181-6 is revised to read as follows:
Sec. 1.181-6 Effective/applicability date.
(a) In general. Except as otherwise provided in this section,
Sec. Sec. 1.181-1 through 1.181-5 apply to productions the first day
of principal photography for which occurs on or after September 29,
2011. Paragraphs 1.181-1(a)(1)(ii), (a)(6), (b)(1)(ii), (b)(2)(vi), and
(c)(2) of Sec. 1.181-1 apply to productions to which section 181 is
applicable and for which the first day of principal photography or in-
between animation occurs on or after December 7, 2012.
(b) Pre-effective date productions. For any taxable year for which
the period of limitation on refund or credit under section 6511 has not
expired, the owner may apply Sec. Sec. 1.181-1 through 1.181-5 to any
production to which section 181 applies and for which the first day of
principal photography (or in-between animation) occurred before
December 7, 2012, provided the owner applies all relevant provisions of
Sec. Sec. 1.181-1 through 1.181-5 to the production.
Sec. 1.181-6T [Removed]
0
Par. 7. Paragraph 1.181-6T is removed.
Approved: November 30, 2012.
Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
Mark J. Mazur
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2012-29630 Filed 12-6-12; 8:45 am]
BILLING CODE 4830-01-P