II 110th CONGRESS 1st Session S. 2375 IN THE SENATE OF THE UNITED STATES November 15, 2007 Mrs. Lincoln (for herself, Ms. Snowe, Mr. Bingaman, Mr. Schumer, and Mr. Hatch) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to modify and make permanent the election to treat certain costs of qualified film and television productions as expenses.

1.

Modification of expensing of certain qualified film and television productions

(a)

Exclusion of participations and residuals from dollar limitation

Paragraph (2) of section 181(a) of the Internal Revenue Code of 1986 (relating to dollar limitation) is amended to read as follows: (2)

Dollar limitation

(A)

In general

The aggregate cost which may be taken into account under paragraph (1) with respect to each qualified film or television production shall not exceed $15,000,000. (B)

Participations and residuals excluded

The term aggregate cost does not include participations and residuals (as defined in section 167(g)(7)(B)). The preceding sentence does not apply to— (i)deferred payment arrangements, structured as a fixed obligation to pay on a date certain, regardless of the revenues generated by a production, and (ii)noncontingent or guaranteed payments where the recipient incurs minimal risk of nonpayment and the amount is not related to the revenue generated from the production, including first dollar gross participations to the extent such participations have priority over loan repayments, distributor fees, and the cost of prints and advertising. (C)

Higher dollar limitation for productions in certain areas

In the case of any qualified film or television production the aggregate cost of which is significantly incurred in an area eligible for designation as— (i)a low-income community under section 45D, or (ii)a distressed county or isolated area of distress by the Delta Regional Authority established under section 2009aa– (iii)1 of title 7, United States Code, subparagraph (A) shall be applied by substituting $20,000,000 for $15,000,000. . (b)

Amortization of remaining costs

Subsection (b) of section 181 of such Code is amended to read as follows: (b)

Amortization of remaining costs

If an election is made under subsection (a) with respect to any qualified film or television production, that portion of the basis of such production in excess of the amount taken into account under subsection (a) shall be allowed as a deduction under section 167(g), the income forecast method of depreciation. . (c)

Expensing of qualified film and television production costs made permanent

Section 181 of such Code is amended by striking subsection (f). (d)

Effective date

The amendments made by this section shall apply to qualified film and television productions commencing after the date of the enactment of this Act.