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By Siamak Kalhor · Siamak Kalhor Consulting · Published and reviewed November 5, 2026 · General information, not tax advice

Productions: film, TV and theater

Section 181 has sunset for new productions

Section 181 expensing is available only for qualified productions that commenced before January 1, 2026. The One Big Beautiful Bill Act did not extend it for film and TV, though it added qualified sound recording productions as a category with a $150,000 cap. Bills to extend Section 181 have been introduced in Congress; Ledger Desk tells callers to confirm current status with your firm.

Bonus depreciation now carries the load

Qualified film, television and live theatrical productions are treated as Section 168(k) property, and 100% bonus depreciation was made permanent for property acquired after January 19, 2025. Unlike Section 181, there is no dollar cap, but the 75% U.S. compensation test still applies. The key difference for investors: the deduction is taken when the production is placed in service, generally its initial release or broadcast, not when costs are incurred.

What Ledger Desk asks a producer

• Budget range, shooting locations and start date.
• Whether the production entity and investors are set up.
• Which state incentives they are considering, and whether pre-certification deadlines are near.
• Payroll company, union status and existing accountant.

Talent: actors, directors, writers and producers

W-2 or loan-out corporation

Talent is usually a W-2 employee of the production, or works through a loan-out corporation that lends their services. Loan-outs, usually S corporations, can deduct business expenses and offer retirement and health plans, but must pay the owner reasonable W-2 compensation. Performing arts is a specified service trade, so the qualified business income deduction is limited at higher incomes. C-corporation loan-outs carry personal holding company risk.

Agent and manager fees

Miscellaneous itemized deductions for unreimbursed employee expenses remain eliminated, now permanently. The qualified performing artist deduction exists but its $16,000 AGI limit is not indexed, so few working performers qualify. This is one of the most common questions callers bring, and a strong signal for a loan-out or planning conversation.

Residuals and royalties

Union residuals paid to performers are generally wages on Form W-2, with pension and health contributions made on them too. Music and book royalties are generally royalty or self-employment income, depending on how active the creator is.

Music: artists, songwriters and producers

Sound recordings made in the U.S. are now eligible for bonus depreciation, and for Section 181 if commenced before 2026. Callers typically ask about royalty statements and audits, touring across states and countries, foreign withholding, and whether to form a company. Ledger Desk captures the catalog, touring footprint and income sources, then flags royalty-audit or multi-state needs for your team.

State film tax credits at a glance

Programs change often. Ledger Desk states the date of what it knows and tells callers your firm will confirm current terms.

State	Credit	Type	Notes (as of Nov 2026)
California (Program 4.0)	35% base; 40% for relocating TV series	Refundable election; transferable for independents	$750M annual cap, FY2025–26 through 2029–30
New York	30% base; +10% upstate	Refundable	$800M annual cap; minimum spend rules apply
Georgia	20% base + 10% promotional uplift	Transferable	No program cap; $500K minimum spend
New Jersey	30–40%	Transferable	Credits commonly sell below face value

Multi-state and international work

Work days in other states can create nonresident filing obligations, and many states require withholding on payments to loan-outs for in-state work. California generally withholds 7% on payments to nonresidents for California services above a threshold. Foreign performers working in the U.S. face 30% withholding on U.S.-source performance income unless a treaty or a Central Withholding Agreement applies, reported on Form 1042-S. Ledger Desk records where the caller lives and where they worked, so your team sees the exposure before the first meeting.

How Ledger Desk handles these calls

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Frequently asked

Sources

• One Big Beautiful Bill Act (Pub. L. 119-21), provisions on bonus depreciation and Section 181. IRS: One Big Beautiful Bill provisions
• IRS Rev. Proc. 2025-32, 2026 inflation adjustments.
• The Tax Adviser, “Sec. 181: Will 2025 be the series finale?” (updated for OBBBA).
• California Film Commission, Film & Television Tax Credit Program 4.0. film.ca.gov/tax-credit
• IRS, About Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. irs.gov

General information as of November 2026, not tax, legal or investment advice. Confirm current law and program terms with a licensed professional.