Projects of interest to the Media and Entertainment industry can be found in the first Priority Guidance Plan (Plan) under the Trump Administration, which was released October 20, 2017, by the Treasury Department's Office of Tax Policy and the IRS. Of particular interest are a few projects related to Section 199, one of which is a new project on qualified film. The projects are those that the Treasury Department and the IRS hope to complete during the 12-month period from July 1, 2017 through June 30, 2018.

Section 199 projects and implications

The Plan includes three projects related to Section 199, two of which have been carried over from the previous plan: (1) final regulations on allocating W-2 wages in a short tax year and in an acquisition or disposition; and (2) regulations addressing computer software. The third project — guidance on qualified films under Section 199 — is new.

A project to finalize regulations under Section 199 that were previously proposed on August 27, 2015, has been removed from this year's Plan. Although the proposed regulations addressed a variety of issues, they primarily addressed statutory changes, on which taxpayers can rely without corresponding regulations.

The project on qualified film may relate to one of the following:

(1) LB&I's 2017 campaign on multi-channel video program distributors and TV broadcasters regarding the definition of a qualified film (i.e., whether each film is an item or whether multiple films can constitute an item), and which the IRS has issued three technical advice memoranda — 201049029, 201646004 and 201647007- relating to such issue

(2) Application of the current regulations' benefits-and-burdens-of-ownership test for contract manufacturing arrangements to film production claimed by a professional sports team, which was the subject of two Chief Counsel Advice memoranda — 201545018 and 201630015 or

(3) Addressing statutory changes to Section 199 applicable to qualified film, as noted earlier

General implications

Additional updates to the current Plan appear likely and will reflect an evolving approach as the Trump Administration's tax reform efforts continue. Specifically, the Treasury Department and the IRS have expressed an intent to periodically update the status of Plan projects and, for example, may add projects to respond to developments arising during the Plan year.

As in the past, the Plan invites public comment regarding the development of the Plan and the projects listed on the Plan.

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