The Ugly Truth About Section 168(k)
Section 168(k) allows for a deduction on film production costs, but it has significant limitations. While it offers a potential tax deferral, it is not a viable tax shelter for financing films. Producers face various risks, including potential tax fraud allegations and loss of copyright.
- ▪Section 168(k) permits a deduction for film production costs but defers it until the film's commercial release.
- ▪The deduction is limited to the owner of the film at the time of release, which is typically the distributor.
- ▪Investors face risks such as being taxed on gross income without offsetting deductions and potential legal issues related to tax fraud.
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BusinessHollywood & EntertainmentThe Ugly Truth About Section 168(k)BySchuyler Moore,Contributor.Forbes contributors publish independent expert analyses and insights. Partner at Greenberg GluskerFollow AuthorMay 28, 2026, 07:36pm EDT--:-- / --:--This voice experience is generated by AI. Learn more.This voice experience is generated by AI. Learn more.IRS Form 1040Getty Images Internal Revenue Code Section 181 (which permitted a 100% deduction for the first $15 million of the cost of producing a film shot in the U.S.) has expired, but Section 168(k) remains, and it permits a similar deduction but with no dollar limit, although the deduction is deferred until commercial release of the film.
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