Broadway League Chimes in On Live Theatre Tax Break: 'It Will Have a Tremendous Impact'

As BroadwayWorld reported yesterday, there is now an unprecedented amendment to the United States' Federal Tax Code.

Due largely to unwavering support from Senator Charles Schumer (D-NY), investors in Live Theatre may now elect to deduct their full investment from their income taxes within the first year of a show's production. What this means for an individual who finances a successful show is that he or she will not be required to pay income tax until the production earns a profit. Under the current Code, only investors in TV and film benefit from this treatment (when capitalization is less than $15 million). For years, Broadway investors have been disadvantaged because their accountants were required to anticipate liability by creatively predicting a show's duration and income, often resulting in tax payments on 'profits' before a producer even earned back his or her initial investment. This was known within the industry as 'phantom income.' Commencing January of 2016, all forms of entertainment media will be treated similarly by the IRS, an amendment the theatre industry has advocated for since 2010. President Obama is expected to sign the bill into law later today.

The concept of including live theatre as a category of entertainment media eligible for this treatment earned bipartisan support in 2013 when Senators Schumer and Roy Blunt (R-MO), as well as Representatives Joseph Crowley (D-NY-14) and Chris Collins (R-NY-27), respectively introduced the Senate's STAGE and House's FILM Acts, which included text that provided the foundation of this Tax Code amendment. While providing a tremendous benefit to theatrical investors, this amendment is expected to be of little-to-no expense to the U.S. as the Congressional Budget Office estimates a cost of just $1 million over a 10 year period.

"Finally, Congress will give its regards to Broadway. By eliminating the double standard in the tax code that prevented Broadway and live theatre from receiving tax benefits, New Yorkers will enjoy more shows, more jobs and more investment in-and-around the Great White Way," said Senator Charles Schumer. "Culture and entertainment is one of America's great economic drivers and investing in live theater is absolutely fundamental to the nurturing and growth of this critical sector of our national economy as an integral part of the entertainment industry . Now, live theater-for the first time ever-can rightfully be offered the same federal tax incentives as those afforded to television and film."

"There is a thriving live theater culture in Missouri, not only in Branson, but in Kansas City, St. Louis and across the state," said Senator Roy Blunt. "The STAGE Act provides live theater production the same tax treatment as television and movie production. Live theater should be encouraged and often employs more local people and can have a bigger economic impact than TV and movie productions. I was happy to work with Senator Schumer on this bill and I am glad it was included in the tax extenders package that we negotiated, voted on and sent to the President. This is good for theater in Missouri and around the country."

Robert E. Wankel, Chairman of The Broadway League and President & Co-CEO of The Shubert Organization, said, "The Broadway community is grateful for Senator Schumer's determination and his commitment to the live theatre industry. We are appreciative of his continuous efforts over the past several years to ensure that theatrical investors receive the same treatment as individuals who invest in television and film. The Broadway and Touring Broadway industries have a combined economic impact of more than $15 billion dollars on the nation's economy and employ tens of thousands of people in the U.S. and around the world, yet we are still very much made up of small businesses that actively seek financing from individual investors. This relatively small amendment to the Tax Code will have a tremendous impact on the theatre business by eliminating one of the largest challenges that producers face when trying to attract capital for what is always a highly risky endeavor. We applaud Senator Schumer, as well as the members of the Ways and Means and Finance Committees, for their extraordinary efforts and recognition of the financial and cultural impact of live entertainment."

Photo Credit: Kevin Thomas Garcia