Section 181 Presentation 05-04-2016

1. Section 181
The Hidden Gem of the 2004 Jobs Act
*THIS IS NOT TAX ADVICE OR A TAX OPINION IT IS
FOR EDUCATIONAL AND DISCUSSION PURPOSES ONLY.

2. 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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3. 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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4. Napkin math of $1MM investment
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5. 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?5

6. 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.

7. 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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8. 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 Anderson
Curtis@OmniVistaAdvisors.com
805-380-5445
Marlon Schulman
MSchulman@HorrorEquityFund.com
844-4HORROR
(844) 446-7767