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Trouble In Transamerica: Deferred Compensation, Contingent Debt, And Overstated Basis, Mary Lafrance

Scholarly Works

For many years, owners of motion pictures and television films have optimized the tax benefits of depreciation deductions by employing a broad concept of basis. In addition to their cash investment, these taxpayers have increased their basis to reflect both fixed and contingent liabilities incurred in creating or acquiring these assets. Some of these liabilities represent royalties for the use of intellectual property such as music and literary works incorporated in the film. Others constitute deferred compensation for the services performed by producers, directors, actors, musicians, and others during the production process. The fixed liabilities do not depend on the …