26 U.S.C. § 181 — Treatment of certain qualified film and tel-

Page 909 TITLE 26—INTERNAL REVENUE CODE § 181 (e) Coordination with section 179 No expenditures shall be taken into account under subsection (a) with respect to the portion of the cost of any property specified in an elec- tion under section 179. (f) Reporting No deduction shall be allowed under sub- section (a) to any taxpayer for any taxable year unless such taxpayer files with the Secretary a report containing such information with respect to the operation of the mines of the taxpayer as the Secretary shall require. (g) Termination This section shall not apply to property placed in service after December 31, 2017. (Added Pub. L. 109–432, div. A, title IV, § 404(a), Dec. 20, 2006, 120 Stat. 2955; amended Pub. L. 110–343, div. C, title III, § 311, Oct. 3, 2008, 122 Stat. 3869; Pub. L. 111–312, title VII, § 743(a), Dec. 17, 2010, 124 Stat. 3319; Pub. L. 112–240, title III, § 316(a), Jan. 2, 2013, 126 Stat. 2331; Pub. L. 113–295, div. A, title I, § 128(a), Dec. 19, 2014, 128 Stat. 4018; Pub. L. 114–113, div. Q, title I, § 168(a), Dec. 18, 2015, 129 Stat. 3067; Pub. L. 115–123, div. D, title I, § 40307(a), Feb. 9, 2018, 132 Stat. 146.) Editorial Notes REFERENCES IN TEXT The date of the enactment of this section, referred to in subsec. (c)(2), is the date of enactment of Pub. L. 109–432, which was approved Dec. 20, 2006. AMENDMENTS 2018—Subsec. (g). Pub. L. 115–123 substituted ‘‘Decem- ber 31, 2017’’ for ‘‘December 31, 2016’’. 2015—Subsec. (g). Pub. L. 114–113 substituted ‘‘Decem- ber 31, 2016’’ for ‘‘December 31, 2014’’. 2014—Subsec. (g). Pub. L. 113–295 substituted ‘‘Decem- ber 31, 2014’’ for ‘‘December 31, 2013’’. 2013—Subsec. (g). Pub. L. 112–240 substituted ‘‘Decem- ber 31, 2013’’ for ‘‘December 31, 2011’’. 2010—Subsec. (g). Pub. L. 111–312 substituted ‘‘Decem- ber 31, 2011’’ for ‘‘December 31, 2009’’. 2008—Subsec. (g). Pub. L. 110–343 substituted ‘‘Decem- ber 31, 2009’’ for ‘‘December 31, 2008’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2018 AMENDMENT Pub. L. 115–123, div. D, title I, § 40307(b), Feb. 9, 2018, 132 Stat. 146, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2016.’’ EFFECTIVE DATE OF 2015 AMENDMENT Pub. L. 114–113, div. Q, title I, § 168(b), Dec. 18, 2015, 129 Stat. 3067, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2014.’’ EFFECTIVE DATE OF 2014 AMENDMENT Pub. L. 113–295, div. A, title I, § 128(b), Dec. 19, 2014, 128 Stat. 4018, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2013.’’ EFFECTIVE DATE OF 2013 AMENDMENT Pub. L. 112–240, title III, § 316(b), Jan. 2, 2013, 126 Stat. 2331, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to property placed in service after December 31, 2011.’’ EFFECTIVE DATE OF 2010 AMENDMENT Pub. L. 111–312, title VII, § 743(b), Dec. 17, 2010, 124 Stat. 3319, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2009.’’ EFFECTIVE DATE Pub. L. 109–432, div. A, title IV, § 404(c), Dec. 20, 2006, 120 Stat. 2957, provided that: ‘‘The amendments made by this section [enacting this section and amending sections 263, 312, and 1245 of this title] shall apply to costs paid or incurred after the date of the enactment of this Act [Dec. 20, 2006].’’ § 180. Expenditures by farmers for fertilizer, etc. (a) In general A taxpayer engaged in the business of farming may elect to treat as expenses which are not chargeable to capital account expenditures (oth- erwise chargeable to capital account) which are paid or incurred by him during the taxable year for the purchase or acquisition of fertilizer, lime, ground limestone, marl, or other materials to enrich, neutralize, or condition land used in farming, or for the application of such materials to such land. The expenditures so treated shall be allowed as a deduction. (b) Land used in farming For purposes of subsection (a), the term ‘‘land used in farming’’ means land used (before or si- multaneously with the expenditures described in subsection (a)) by the taxpayer or his tenant for the production of crops, fruits, or other agricul- tural products or for the sustenance of live- stock. (c) Election The election under subsection (a) for any tax- able year shall be made within the time pre- scribed by law (including extensions thereof) for filing the return for such taxable year. Such election shall be made in such manner as the Secretary may by regulations prescribe. Such election may not be revoked except with the consent of the Secretary. (Added Pub. L. 86–779, § 6(a), Sept. 14, 1960, 74 Stat. 1001; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) Editorial Notes AMENDMENTS 1976—Subsec. (c). Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Pub. L. 86–779, § 6(d), Sept. 14, 1960, 74 Stat. 1001, pro- vided that: ‘‘The amendments made by subsections (a), (b), and (c) [enacting this section and amending section 263 of this title] shall apply to taxable years beginning after December 31, 1959.’’ § 181. Treatment of certain qualified film and tel- evision and live theatrical productions (a) Election to treat costs as expenses (1) In general A taxpayer may elect to treat the cost of any qualified film or television production, Page 910 TITLE 26—INTERNAL REVENUE CODE § 181 and any qualified live theatrical production, as an expense which is not chargeable to cap- ital account. Any cost so treated shall be al- lowed as a deduction. (2) Dollar limitation (A) In general Paragraph (1) shall not apply to so much of the aggregate cost of any qualified film or television production or any qualified live theatrical production as exceeds $15,000,000. (B) Higher dollar limitation for productions in certain areas In the case of any qualified film or tele- vision production or any qualified live theat- rical production the aggregate cost of which is significantly incurred in an area eligible for designation as— (i) a low-income community under sec- tion 45D, or (ii) a distressed county or isolated area of distress by the Delta Regional Author- ity established under section 2009aa–1 of title 7, United States Code, subparagraph (A) shall be applied by sub- stituting ‘‘$20,000,000’’ for ‘‘$15,000,000’’. (b) No other deduction or amortization deduc- tion allowable With respect to the basis of any qualified film or television production or any qualified live theatrical production to which an election is made under subsection (a), no other depreciation or amortization deduction shall be allowable. (c) Election (1) In general An election under this section with respect to any qualified film or television production or any qualified live theatrical production shall be made in such manner as prescribed by the Secretary and by the due date (including extensions) for filing the taxpayer’s return of tax under this chapter for the taxable year in which costs of the production are first in- curred. (2) Revocation of election Any election made under this section may not be revoked without the consent of the Sec- retary. (d) Qualified film or television production For purposes of this section— (1) In general The term ‘‘qualified film or television pro- duction’’ means any production described in paragraph (2) if 75 percent of the total com- pensation of the production is qualified com- pensation. (2) Production (A) In general A production is described in this paragraph if such production is property described in section 168(f)(3). (B) Special rules for television series In the case of a television series— (i) each episode of such series shall be treated as a separate production, and (ii) only the first 44 episodes of such se- ries shall be taken into account. (C) Exception A production is not described in this para- graph if records are required under section 2257 of title 18, United States Code, to be maintained with respect to any performer in such production. (3) Qualified compensation For purposes of paragraph (1)— (A) In general The term ‘‘qualified compensation’’ means compensation for services performed in the United States by actors, production per- sonnel, directors, and producers. (B) Participations and residuals excluded The term ‘‘compensation’’ does not include participations and residuals (as defined in section 167(g)(7)(B)). (e) Qualified live theatrical production For purposes of this section— (1) In general The term ‘‘qualified live theatrical produc- tion’’ means any production described in para- graph (2) if 75 percent of the total compensa- tion of the production is qualified compensa- tion (as defined in subsection (d)(3)). (2) Production (A) In general A production is described in this paragraph if such production is a live staged produc- tion of a play (with or without music) which is derived from a written book or script and is produced or presented by a taxable entity in any venue which has an audience capacity of not more than 3,000 or a series of venues the majority of which have an audience ca- pacity of not more than 3,000. (B) Touring companies, etc. In the case of multiple live staged produc- tions— (i) for which the election under this sec- tion would be allowable to the same tax- payer, and (ii) which are— (I) separate phases of a production, or (II) separate simultaneous stagings of the same production in different geo- graphical locations (not including mul- tiple performance locations of any one touring production), each such live staged production shall be treated as a separate production. (C) Phase For purposes of subparagraph (B), the term ‘‘phase’’ with respect to any qualified live theatrical production refers to each of the following, but only if each of the following is treated by the taxpayer as a separate activ- ity for all purposes of this title: (i) The initial staging of a live theatrical production. (ii) Subsequent additional stagings or touring of such production which are pro- Page 911 TITLE 26—INTERNAL REVENUE CODE § 181 duced by the same producer as the initial staging. (D) Seasonal productions (i) In general In the case of a live staged production not described in subparagraph (B) which is produced or presented by a taxable entity for not more than 10 weeks of the taxable year, subparagraph (A) shall be applied by substituting ‘‘6,500’’ for ‘‘3,000’’. (ii) Short taxable years For purposes of clause (i), in the case of any taxable year of less than 12 months, the number of weeks for which a produc- tion is produced or presented shall be annualized by multiplying the number of weeks the production is produced or pre- sented during such taxable year by 12 and dividing the result by the number of months in such taxable year. (E) Exception A production is not described in this para- graph if such production includes or consists of any performance of conduct described in section 2257(h)(1) of title 18, United States Code. (f) Application of certain other rules For purposes of this section, rules similar to the rules of subsections (b)(2) and (c)(4) of sec- tion 194 shall apply. (g) Termination This section shall not apply to qualified film and television productions or qualified live the- atrical productions commencing after December 31, 2025. (Added Pub. L. 108–357, title II, § 244(a), Oct. 22, 2004, 118 Stat. 1445; amended Pub. L. 109–135, title IV, § 403(e)(1), Dec. 21, 2005, 119 Stat. 2623; Pub. L. 110–343, div. C, title V, § 502(a), (b), (d), Oct. 3, 2008, 122 Stat. 3876, 3877; Pub. L. 111–312, title VII, § 744(a), Dec. 17, 2010, 124 Stat. 3319; Pub. L. 112–240, title III, § 317(a), Jan. 2, 2013, 126 Stat. 2331; Pub. L. 113–295, div. A, title I, § 129(a), Dec. 19, 2014, 128 Stat. 4018; Pub. L. 114–113, div. Q, title I, § 169(a)–(b)(2), (c), Dec. 18, 2015, 129 Stat. 3067, 3068; Pub. L. 115–123, div. D, title I, § 40308(a), Feb. 9, 2018, 132 Stat. 146; Pub. L. 116–94, div. Q, title I, § 117(a), Dec. 20, 2019, 133 Stat. 3229; Pub. L. 116–260, div. EE, title I, § 116(a), Dec. 27, 2020, 134 Stat. 3051.) Editorial Notes PRIOR PROVISIONS A prior section 181, Pub. L. 87–834, § 2(c), Oct. 16, 1962, 76 Stat. 970, related to a deduction for unused invest- ment credit, prior to repeal by Pub. L. 88–272, title II, § 203(a)(3)(B), (4), Feb. 26, 1964, 78 Stat. 34, applicable in case of property placed in service after Dec. 31, 1963, with respect to taxable years ending after such date, and in case of property placed in service before Jan. 1, 1964, with respect to taxable years beginning after Dec. 31, 1963. AMENDMENTS 2020—Subsec. (g). Pub. L. 116–260 substituted ‘‘Decem- ber 31, 2025’’ for ‘‘December 31, 2020’’. 2019—Subsec. (g). Pub. L. 116–94 substituted ‘‘Decem- ber 31, 2020’’ for ‘‘December 31, 2017’’. 2018—Subsec. (g). Pub. L. 115–123 substituted ‘‘Decem- ber 31, 2017’’ for ‘‘December 31, 2016’’. 2015—Pub. L. 114–113, § 169(b)(2)(C), inserted ‘‘and live theatrical’’ after ‘‘film and television’’ in section catchline. Subsec. (a)(1). Pub. L. 114–113, § 169(b)(1), inserted ‘‘, and any qualified live theatrical production,’’ after ‘‘any qualified film or television production’’. Subsecs. (a)(2)(A), (B), (b), (c)(1). Pub. L. 114–113, § 169(b)(2)(A), inserted ‘‘or any qualified live theatrical production’’ after ‘‘qualified film or television produc- tion’’. Subsec. (e). Pub. L. 114–113, § 169(c)(2), added subsec. (e). Former subsec. (e) redesignated (f). Subsec. (f). Pub. L. 114–113, § 169(c)(1), redesignated subsec. (e) as (f). Former subsec. (f) redesignated (g). Pub. L. 114–113, § 169(b)(2)(B), which directed insertion of ‘‘or qualified live theatrical productions’’ after ‘‘qualified film or television productions’’, was exe- cuted by making the insertion after ‘‘qualified film and television productions’’, to reflect the probable intent of Congress. Pub. L. 114–113, § 169(a), substituted ‘‘December 31, 2016’’ for ‘‘December 31, 2014’’. Subsec. (g). Pub. L. 114–113, § 169(c)(1), redesignated subsec. (f) as (g). 2014—Subsec. (f). Pub. L. 113–295 substituted ‘‘Decem- ber 31, 2014’’ for ‘‘December 31, 2013’’. 2013—Subsec. (f). Pub. L. 112–240 substituted ‘‘Decem- ber 31, 2013’’ for ‘‘December 31, 2011’’. 2010—Subsec. (f). Pub. L. 111–312 substituted ‘‘Decem- ber 31, 2011’’ for ‘‘December 31, 2009’’. 2008—Subsec. (a)(2)(A). Pub. L. 110–343, § 502(b), reen- acted heading without change and amended text gen- erally. Prior to amendment, text read as follows: ‘‘Paragraph (1) shall not apply to any qualified film or television production the aggregate cost of which ex- ceeds $15,000,000.’’ Subsec. (d)(3)(A). Pub. L. 110–343, § 502(d), substituted ‘‘actors, production personnel, directors, and pro- ducers.’’ for ‘‘actors, directors, producers, and other relevant production personnel.’’ Subsec. (f). Pub. L. 110–343, § 502(a), substituted ‘‘De- cember 31, 2009’’ for ‘‘December 31, 2008’’. 2005—Subsec. (d)(2). Pub. L. 109–135 struck out ‘‘For purposes of a television series, only the first 44 episodes of such series may be taken into account.’’ at end of subpar. (A), added subpar. (B), and redesignated former subpar. (B) as (C). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2020 AMENDMENT Pub. L. 116–260, div. EE, title I, § 116(b), Dec. 27, 2020, 134 Stat. 3051, provided that: ‘‘The amendment made by this section [amending this section] shall apply to pro- ductions commencing after December 31, 2020.’’ EFFECTIVE DATE OF 2019 AMENDMENT Pub. L. 116–94, div. Q, title I, § 117(b), Dec. 20, 2019, 133 Stat. 3229, provided that: ‘‘The amendment made by this section [amending this section] shall apply to pro- ductions commencing after December 31, 2017.’’ EFFECTIVE DATE OF 2018 AMENDMENT Pub. L. 115–123, div. D, title I, § 40308(b), Feb. 9, 2018, 132 Stat. 146, provided that: ‘‘The amendment made by this section [amending this section] shall apply to pro- ductions commencing after December 31, 2016.’’ EFFECTIVE DATE OF 2015 AMENDMENT Pub. L. 114–113, div. Q, title I, § 169(d), Dec. 18, 2015, 129 Stat. 3069, provided that: ‘‘(1) EXTENSION.—The amendment made by subsection (a) [amending this section] shall apply to productions commencing after December 31, 2014. ‘‘(2) MODIFICATIONS.— ‘‘(A) IN GENERAL.—The amendments made by sub- sections (b) and (c) [amending this section] shall Page 912 TITLE 26—INTERNAL REVENUE CODE [§ 182 apply to productions commencing after December 31, 2015. ‘‘(B) COMMENCEMENT.—For purposes of subpara- graph (A), the date on which a qualified live theat- rical production commences is the date of the first public performance of such production for a paying audience.’’ EFFECTIVE DATE OF 2014 AMENDMENT Pub. L. 113–295, div. A, title I, § 129(b), Dec. 19, 2014, 128 Stat. 4018, provided that: ‘‘The amendment made by this section [amending this section] shall apply to pro- ductions commencing after December 31, 2013.’’ EFFECTIVE DATE OF 2013 AMENDMENT Pub. L. 112–240, title III, § 317(b), Jan. 2, 2013, 126 Stat. 2331, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to productions commencing after December 31, 2011.’’ EFFECTIVE DATE OF 2010 AMENDMENT Pub. L. 111–312, title VII, § 744(b), Dec. 17, 2010, 124 Stat. 3319, provided that: ‘‘The amendment made by this section [amending this section] shall apply to pro- ductions commencing after December 31, 2009.’’ EFFECTIVE DATE OF 2008 AMENDMENT Pub. L. 110–343, div. C, title V, § 502(e), Oct. 3, 2008, 122 Stat. 3877, provided that: ‘‘(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section [amending this section and section 199 of this title] shall apply to qualified film and television productions commencing after December 31, 2007. ‘‘(2) DEDUCTION.—The amendments made by sub- section (c) [amending section 199 of this title] shall apply to taxable years beginning after December 31, 2007.’’ EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–135 effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title. EFFECTIVE DATE Pub. L. 108–357, title II, § 244(c), Oct. 22, 2004, 118 Stat. 1447, provided that: ‘‘The amendments made by this section [enacting this section] shall apply to qualified film and television productions (as defined in section 181(d)(1) of the Internal Revenue Code of 1986, as added by this section) commencing after the date of the en- actment of this Act [Oct. 22, 2004].’’ [§ 182. Repealed. Pub. L. 99–514, title IV, § 402(a), Oct. 22, 1986, 100 Stat. 2221] Section, added Pub. L. 87–834, § 21(a), Oct. 16, 1962, 76 Stat. 1063; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834, authorized de- duction of expenditures by farmers for clearing land. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Pub. L. 99–514, title IV, § 402(c), Oct. 22, 1986, 100 Stat. 2221, provided that: ‘‘The amendments made by this section [amending sections 263 and 1252 of this title and repealing this section] shall apply to amounts paid or incurred after December 31, 1985, in taxable years end- ing after such date.’’ § 183. Activities not engaged in for profit (a) General rule In the case of an activity engaged in by an in- dividual or an S corporation, if such activity is not engaged in for profit, no deduction attrib- utable to such activity shall be allowed under this chapter except as provided in this section. (b) Deductions allowable In the case of an activity not engaged in for profit to which subsection (a) applies, there shall be allowed— (1) the deductions which would be allowable under this chapter for the taxable year with- out regard to whether or not such activity is engaged in for profit, and (2) a deduction equal to the amount of the deductions which would be allowable under this chapter for the taxable year only if such activity were engaged in for profit, but only to the extent that the gross income derived from such activity for the taxable year exceeds the deductions allowable by reason of paragraph (1). (c) Activity not engaged in for profit defined For purposes of this section, the term ‘‘activ- ity not engaged in for profit’’ means any activ- ity other than one with respect to which deduc- tions are allowable for the taxable year under section 162 or under paragraph (1) or (2) of sec- tion 212. (d) Presumption If the gross income derived from an activity for 3 or more of the taxable years in the period of 5 consecutive taxable years which ends with the taxable year exceeds the deductions attrib- utable to such activity (determined without re- gard to whether or not such activity is engaged in for profit), then, unless the Secretary estab- lishes to the contrary, such activity shall be presumed for purposes of this chapter for such taxable year to be an activity engaged in for profit. In the case of an activity which consists in major part of the breeding, training, showing, or racing of horses, the preceding sentence shall be applied by substituting ‘‘2’’ for ‘‘3’’ and ‘‘7’’ for ‘‘5’’. (e) Special rule (1) In general A determination as to whether the presump- tion provided by subsection (d) applies with re- spect to any activity shall, if the taxpayer so elects, not be made before the close of the fourth taxable year (sixth taxable year, in the case of an activity described in the last sen- tence of such subsection) following the taxable year in which the taxpayer first engages in the activity. (2) Initial period If the taxpayer makes an election under paragraph (1), the presumption provided by subsection (d) shall apply to each taxable year in the 5-taxable year (or 7-taxable year) period beginning with the taxable year in which the taxpayer first engages in the activity, if the gross income derived from the activity for 3 (or 2 if applicable) or more of the taxable years in such period exceeds the deductions attrib- utable to the activity (determined without re- gard to whether or not the activity is engaged in for profit). (3) Election An election under paragraph (1) shall be made at such time and manner, and subject to