English professor at Metropolitan State College of Denver, fimmaker Glenn Berggoetz believes that it will be boondoggle for independent filmmakers making films for as much as $5 – $15 million.
“I find it very peculiar when a film has a $15 million budget with three or four A-list stars in it, and it’s considered an independent film,” Berggoetz told BZFilm.
On Tuesday Jan 1, the drafted by the Senate and passed by the House, extends for another year production tax credits first allowed by the Bush administration in 2004.
The idea was first advanced as a way to slow the flight of lower budget productions to foreign sites, many of which offer generous allowances of various sorts.
As extended through 2013, the credit allows deduction of production costs up to $15 million and as much as $20 million for shoots that occur in sites that meet the bill’s criteria for an economically disadvantaged area.
Out of fear for runaway film production, the Congress assed legislation that resulted in Section 181 of the IRS Tax Code. Section 181 states that investment in a motion picture shot in the US is 100% tax deductable for the investor in the same year invested.
Under Section 181 an investor may deduct the money which is invested in a film or television production from his passive income earned in the same year.
If the investor is actively involved in the operation of the production, he or she may deduct the amount of investment from all active income earned in the same year. Productions with budgets below $15 million (up to $20 million) which have at least 75 percent of its production completed within the U.S. qualify under Section 181. Investors can be either individuals or businesses.
Professor Berggoetz noted that for major independent films, the prolongation of “Section 181″ is an advantage.
“It should make it easier for them to raise lots of money to make their films, which is a good thing,” he told BZFilm. “It’s important for there to be support of the arts, both through private investors and the government.”
As for others, Berggoetz believes it won’t make much of difference, for a simple reason.
“For filmmakers like me who make ultra-small-budget films, Section 181 probably won’t have an impact on our filmmaking,” he said.
“I fund all my films myself, and whether I get a tax break or not won’t effect whether I make a film or not. Whenever I feel like I have a good script that will be fun to shoot, I’ll make a film.”
Noting that he has been making films since 2006, Berggoetz said there has been a clear difference of making films now and a two decades ago.
“From alking with actors and filmmakers who were acting in and making films in the 1990s, they said it was a whole different world back then,” he said. “Based on the successes of films like “The Blair Witch Project” and “Clerks,” these people have told me that it was unbelievable the amount of money that was raised to make lousy films at the time.”
“It’s not that these films were getting funded with millions of dollars, but often times local people would invest tens of thousands of dollars into a local indie film because everyone thought they were going to make millions of dollars off each film,” he underscored.
Berggoetz added that “this kind of brazen funding ended ten years ago with the economic collapse”.
Glenn W. Berggoetz is an American director, writer and actor. He has directed several low budget films, including “The Worst Movie Ever!” – a film which had the lowest grossing opening weekend in history.Follow @bzfilmdotcom
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