Section 181 Film Production Expenses for 2016 - Do I enter deduction on Schedule A? Which Line on Which Schedule?

[PatriciaV · Accepted solution]

Section 181 Film Production Expenses would be reported as a Business Expense on Schedule C.

The easiest way to find Schedule C in TurboTax is to open your return and use the Search box at the top right side of the TurboTax header. Enter "schedule c", hit Enter, then click on "jump to schedule c". This will take you directly to the start of this section where you can set up your business and enter your income & expenses.

Or go to My Account >> Tools >> Topic Search. Type in "schedule c", click the topic in the list, then click "GO".

(If you are using the mobile app and don't have My Account or Tools on your screen, try logging into TurboTax from a laptop or desktop browser.)

You will be prompted to upgrade, if necessary, to the TurboTax version that is best for your tax situation.

[paulsterne]

If the Film Production Expenses are passive where do they go?

[PatriciaV]

In the case of passive activities, the expenses would be reported on Schedule K-1. This is the only way for investors to take advantage of these deductions.
See this website: <a rel="nofollow" target="_blank" href="https://mediasociety.com/film-financing-can-you-take-advantage-of-section-181/">https://mediasociety...>

[paulsterne]

Do I create a new Schedule C for the Film Deduction or include on existing Schedule C for sole proprietor LLC

[PatriciaV]

If the existing Schedule C relates to film production, then include the expenses there. Otherwise, create a new Schedule C business.

[reggieut]

Can I work this (Section 181 Film Production Expenses on Schedule C) on the Deluxe version of TurboTax?

[DawnC]

No, you will need TurboTax Self-Employed to report any expenses on a Schedule C.

[reggieut]

Hi,

Just so I'm clear on this :

I'm retired living off of Social Security and Investment Accounts as my only sources of income.

In 2019, I funded a short film for my son,who is a filmmaker.  I  did this as an investment for me.

I don't expect the film to make any money.

For taking a deduction for this expense, I'm referencing IRS Tax Code 181 (Treatment of Certain Qualified Film and Television and Live Theatrical Productions) and 1.181.1(Deduction for Qualified Film and Television Production Costs).

I already have Turbotax Deluxe for 2019.

You previously corresponded that I need to upgrade to Turbotax Home and Business to handle this deduction.

Is that correct?

Thanks !

Reggie Johnson 

[DaveF1006]

Yes because since this is an independent enterprise, you will to report your expenses on a Schedule C, which requires an upgrade to Turbotax Home and Business  or Turbo Tax Self-Employed if you are using the online version of Turbo Tax.

[reggieut]

I go to Schedule C in the Business section of my return and see a business income of -$31,284.

In the Personal section of the return, it shows a QBI of only $52.00.

I thought the QBI was calculated by : -$31,284 X 20% = -$6,256.80, which would reduce my taxable income even further as I understand it, but it didn't do that.

[DavidS127]

Your qualified business income (QBI) deduction is based on the net QBI income on your tax return.  If the net QBI on your tax return is a loss, you won't get a QBI deduction for that year.

If you have another QBI business (not a Publicly Traded Partnership (PTP) or Real Estate Investment Trust (REIT)) the QBI from that business will be netted against the loss from this Schedule C business before the (generally) 20% QBI percentage is applied.

If you don't have another QBI business with income (e.g., another Schedule C, a Schedule K-1, or a Schedule E rental with income), your $31K loss from the Schedule C business will "carry forward" to future years.  Once the Schedule C business has cumulative QBI (income is more than losses since 2018), or once you QBI from other businesses that is more than the $31K, you will get a QBI deduction.

If you don't have other QBI businesses on your tax return, the $52 QBI deduction you see is likely from a Section 199A (REIT) dividend from box 5 of a Form 1099-DIV, or a Schedule K-1 with PTP or REIT dividend income.