Winter 2017

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58 CINEMONTAGE / Q1 2017 Compiled by Jeff Burman A s the new year dawned, the only federal tax incentive designed specifically to keep film and TV production in the United States has lapsed, writes David Robb on Deadline Hollywood. The program had been giving tax breaks to investors for shows shot in the US for more than a decade, but it ended on the first day of 2017. For Hollywood, it's the first casualty of the new way of thinking in Washington. Enacted 13 years ago as part of the American Jobs Creation Act of 2004, Section 181 of the Inter- nal Revenue Code was designed to reduce the flow of runaway production to other countries that were — and still are — offering tax breaks to lure away American productions. The Motion Picture Association of America (MPAA) called Section 181 "an important provision that promotes domestic film production," but it was not permanent. It had to be renewed by Congress every two years. And last year, lawmakers let it die. A House bill was introduced to extend it, but it failed to win support in the Ways and Means Committee. The incentive still could be renewed retroactively in 2017 or 2018, as it was in 2010, but under a Donald Trump presidency, there is little political will to do so. Passed to make it easier for film and TV production to stay in the US, the law substantially reduced risk by giving investors a 100 percent loss against taxable income in the year or years the money was spent. The IRS allowed this deduction on the first $15 million invested in every qualified project. The law was a response to the rush of shows moving to Canada to take advantage of 35 percent tax credits there — an exodus triggered by the "cultural exemption" contained in the 1994 North LABOR MAT TERS Hollywood Loses Its Tax Breaks

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