109th CONGRESS
2d Session
H. R. 6284
To amend the Internal Revenue Code of 1986 to allow a loss for
development costs of certain creative property.
IN THE HOUSE OF REPRESENTATIVES
September 29, 2006
Mr. BECERRA introduced the following bill; which was referred to the Committee
on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to allow a loss for
development costs of certain creative property.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. ALLOWANCE OF LOSS DEDUCTION FOR DEVELOPMENT COSTS OF CERTAIN
CREATIVE PROPERTY.
(a) Film Development Costs- Section 165 of the Internal Revenue Code of
1986 (relating to loss deductions) is amended by redesignating subsection
(m) as subsection (n) and inserting the following new subsection:
`(m) Film Development Costs- For purposes of this section--
`(1) IN GENERAL- If a creative property is not set for production within
the 3-year period beginning on the date on which the taxpayer first incurs
development costs with respect to the property--
`(A) the costs of developing such property shall be treated as an expense
which is not chargeable to capital account,
`(B) any cost so treated shall be allowed as a deduction, and
`(C) such deduction shall be treated as a loss allowable under subsection
(a) for the first taxable year beginning after the end of such 3-year
period unless it is established that the taxpayer did not intend to
dispose of the property.
`(2) RECAPTURE- The Secretary shall, by regulations, provide for recapturing
the benefit of any loss allowable under this subsection if--
`(A) the taxpayer begins principal photography with respect to the creative
property in any subsequent taxable year, or
`(B) the taxpayer derives income from the disposition of the creative
property (including settlement funds resulting from copyright infringement).
The taxpayer shall pay interest, computed by determining the underpayment
of tax which would result solely from disallowance of such loss in the
taxable year in which the loss was claimed under paragraph (1), using
the adjusted overpayment rate (as defined in section 460(b)(7)), compounded
daily, on the underpayment so determined. The preceding sentence shall
not apply where the loss claimed under paragraph (1) was $100,000 or less.
`(3) DEFINITIONS AND SPECIAL RULES- For purposes of this subsection--
`(A) CREATIVE PROPERTY- The term `creative property' means the intangible
right to exploit a screenplay, script, story outline, or motion picture
production right to a book, play, or other similar creative property
for purposes of potential future film development, production and exploitation.
`(B) FILM- The term `film' means a feature film, television special,
television series, or similar product (including animated films and
television programming) that is sold, licensed or exhibited, whether
produced on film, videotape, digital, or other video recording format.
Such term shall not include any production for which records are required
to be maintained under section 2257 of title 18, United States Code,
with respect to any performer in such production.
`(C) DEVELOPMENT COSTS- The term `development costs' means costs that
are incurred to acquire, develop, or evaluate whether to exploit creative
property.
`(D) SET FOR PRODUCTION- A creative property shall not be treated as
set for production until a commitment to fund production is made and
active pre-production has begun.'.
(1) IN GENERAL- The amendment made by subsection (a) shall apply to taxable
years ending after the date of the enactment of this Act.
(2) CHANGE IN METHOD OF ACCOUNTING- In the case of any taxpayer required
by the amendment made by subsection (a) to change its method of accounting
for its first taxable year ending after the date of the enactment of this
Act--
(A) such change shall be treated as initiated by the taxpayer, and
(B) such change shall be treated as made with the consent of the Secretary
of the Treasury.
END
