What is Production cost expensing?
Production cost expensing refers to the federal tax provision under Section 70434 of the One Big Beautiful Bill Act, allowing sound recording producers to immediately deduct qualifying production costs rather than capitalizing and depreciating them over multiple years. Eligible producers can expense up to $150,000 per qualified sound recording production, provided all recording and production activities occur within the United States. Qualifying expenses include studio recording time, sound engineering services, mixing and mastering work, producer fees, and equipment rental directly attributable to the production. This immediate expensing treatment creates substantial cash flow benefits and reduces current-year tax liability by $31,500 to $55,500 per production, depending on the producer's tax rate and entity structure. The provision applies to productions starting in tax years after the bill's enactment and explicitly prohibits claiming duplicate deductions through other tax provisions. Completed sound recordings also qualify for Depreciation and amortization when placed in service before January 1, 2029, creating additional tax planning opportunities for music industry professionals.
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