Imagine sitting at home on Oscar night as the final award is announced. The winning film’s actors begin making their way to the stage. The director follows, along with producers and other members of the cast and crew. While the director accepts the award and the lead actor smiles for the cameras, you spot a guy standing near the edge of the group who looks surprisingly familiar.

It takes you a moment to place him. Then you remember. You were paired together in a foursome at a charity golf tournament a few years ago. You spent most of an afternoon together, talked between shots, had dinner and drinks afterwards, and haven’t seen or spoken with him since. As far as you knew, he had nothing to do with the movie business. Yet there he stands among the people celebrating the biggest award of the evening because he invested in the film.

Seeing him on that stage might make you wonder whether film investing only makes sense when a project looks destined for awards season. It doesn’t. A film production can potentially qualify for Section 168(k) treatment from the IRS without ever becoming a critically acclaimed movie or a box-office hit. A horror film, comedy, drama, romantic comedy, or even a modest independent production may qualify when it satisfies the federal tax requirements. As with any project as an investor, you still need to evaluate the project as an investment, including the possibility of losing money.

The tax angle begins with a part of the Internal Revenue Code that many investors have encountered in a very different context.

What Does Section 168(k) Have to Do With a Movie?

Business owners and real estate investors may already know about bonus depreciation from equipment purchases and cost-segregation studies, as well as other investments involving depreciable property. Section 168(k) of the Internal Revenue Code (IRC) allows an additional first-year depreciation deduction for qualified property. In July 2025, H.R. 1 (the One, Big, Beautiful Bill Act – OBBBA) amended the provision and permanently established a 100 percent additional first-year depreciation deduction for qualified property acquired after Jan. 19, 2025. Internal Revenue Service (IRS) Notice 2026-11 provides guidance for applying the amended rules.

Understanding Bonus Depreciation: When a business entity invests in certain types of property, federal tax law generally allows the cost of that property to be deducted through depreciation. Those deductions may otherwise occur over a period of years. Bonus depreciation can accelerate the deduction, allowing qualifying costs to be deducted much sooner. Under the current Section 168(k) rules, qualifying property may be eligible for 100 percent depreciation in the year it is placed in service. Certain qualified film and television productions can fall within these rules.

Motion pictures occupy an unusual place within those rules. Section 168(k) specifically includes a “qualified film, television or live theatrical production” within the definition of qualified property when the applicable requirements have been met. Congress first brought qualified film and television productions into Section 168(k) through the Tax Cuts and Jobs Act of 2017, and the current statute retains that treatment.

That creates a potential tax planning opportunity when an investor participates in a qualifying production through an entity taxed as a partnership. The entity may claim depreciation on eligible production costs, and the resulting tax items may flow through to its partners. An investor could therefore receive an allocation associated with bonus depreciation from an asset that looks very different from the machinery, vehicles, or other business property commonly associated with depreciation.

The word “potential” deserves attention because several things have to happen before a projected deduction becomes useful on an investor’s federal income tax return: Continue reading… Continue reading… Continue reading…