Question on Domestic Production Activities Deduction?
If I were to get into a contract where I lend someone the money to product a film. Once he completes the film, I will forgive the loan and pay him $65,000 for the film. Then i sell the film to a distribution company for a profit. WIll i qualify for the Domestic Production Activities Deduction???
Answers & Comments
Verified answer
1. "Selling, leasing, or licensing motion pictures that have been produced in the United States" is covered under "Qualified Production Activities" for the purpose of Domestic Production Activities Deduction under Section 199 Deduction of Income Tax Law.
2. Businesses with "qualified production activities" can take a tax deduction of 3% from net income. This is a tax break pure and simple. The more complicated the business, the more complicated the math for calculating the Domestic Production Activities Deduction. In a nutshell, businesses engaged in manufacturing and other qualified production activities will need to implement cost accounting mechanisms to make sure their tax deduction is accurately calculated.
3. For details, please read at:
http://taxes.about.com/od/deductionscredits/a/dome...
4. Prima facie, you might qualify for the above deduction. But, since tax laws are complicated, you may seek advice from a tax expert.
5. You may like to seek 'free' legal advice from expert lawyers at the following site:
http://www.freeadvice.com/
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