Film Production Costs (Section 181)

[lazybeav]

I am a single person LLC.  In 2020 the LLC invested money in a film for production costs for which the LLC will receive a percentage of the films revenue. I have a few questions. First, are those production costs deductible under section 181?  Are the production costs considered business expenses? Do the expenses go on Schedule C? Where (which line) on Schedule C do these expenses go?  Do I need to add an Election Statement to the return to use Section 181?  Is there anything else I need to know about deducting the production costs?

[npierson7]

Yes, you can deduct the investments as an expense under the section 181.

The  Section 181 is available to productions of qualified, television, films, and theater productions with more than 75 percent of costs within the United States.  It is extended through the 2020 tax year.  You should attach a statement to the return  stating that you're making an election under section 181.

There is nowhere in the to input in TurboTax the deduction nor is there a standard election form contained in the program. 

Rather, you would add a Miscellaneous Statement or Additional Information sheet in Forms Mode. 

[lazybeav]

Just to be clear.  The amount for production costs does not go on Schedule C but goes on a miscellaneous statement or additional information sheet? OR it does go on Schedule C and the statement of election goes on the miscellaneous or additional information sheet?

[JeffreyR77]

The amount for production costs does go on Schedule C and the statement of election goes on the Miscellaneous Statement.

@npierson7