Section 181The Hidden Gem of the 2004 Jobs Act

*THIS IS NOT TAX ADVICE OR A TAX OPINION IT IS FOR EDUCATIONAL AND DISCUSSION PURPOSES ONLY.

What is Section 181?

A little known production incentive contained in the Jobs Act of 2004 to keep film and television production in the United States.

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How does it work?

100% of investment in qualified projects is deductible in the year of production Project budget must be less than $15MM 75% of compensation must be for services performed

in the United States Project must be shot in the year deduction is claimed

Section 181 sunsets on 31 Dec 2016 (unless renewed)

Can be combined with other tax incentives (usually state dependent)

Taxpayer simply elects Section 181 treatment

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Napkin math of $1MM investment

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Can I offset active (non-passive) income?

First, let’s define Passive Income. Passive income can generally be generated from only two sources: Rental activities; or, Earnings from a business in which the taxpayer does not

materially participate. Material participation tests related to Section

181: Does the taxpayer work more than 500 hours in the

business, or Does the taxpayer do most of the work, or Does the taxpayer work 100 hours and nobody works

more?

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If you meet the Material Participation test…

…then the answer is YES. This means that the investment can be

written off against active income Napkin math is basically the same, just

offset against a different pool of income. Depending on individual circumstances, an offset

against the 3.8% Net Investment Income Tax may be applicable.

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NOTE: Documentation of material participation generally required.

New in 2016 – Live theatre now qualifies

Written into the latest renewal of Section 181 was a surprise inclusion for live theater productions.

Same general requirements as film/video productions

Limited to productions with audience capacity of 3,000 or less

Seasonal productions require audience capacity of 6,500 or less

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Section 181 opportunities ‘ready to shoot’

This presentation does not constitute an offer or solicitation to sell shares or securities of any kind. Any such offer or solicitation will be made only in accordance with the terms of all applicable securities and other laws.

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Curtis AndersonCurtis@OmniVistaAdvisors.com805-380-5445

Marlon SchulmanMSchulman@HorrorEquityFund.com844-4HORROR(844) 446-7767