What This Bill Does
This bill changes federal tax law to include sound recordings in a program that lets people deduct production costs from their taxes immediately rather than spreading the deduction over multiple years. The bill modifies the Internal Revenue Code to add sound recording productions to an existing program that already applies to films, television shows and live theatrical productions.
Who It Affects
People and businesses that produce sound recordings in the United States.
Key Provisions
• Sound recording productions now qualify for an election to expense costs, meaning producers can deduct qualified sound recording production costs from their taxes in one year instead of spreading deductions over time (Sec. 2(a))
• The total amount of sound recording production costs that can be deducted in any single year cannot exceed $150,000 (Sec. 2(b))
• Producers cannot claim other tax deductions or amortization deductions (spreading costs over time) for the same sound recording production costs they choose to deduct under this provision (Sec. 2(c))
• A sound recording qualifies for this deduction only if it is produced and recorded in the United States (Sec. 2(e))
• Sound recording productions are considered "placed in service" (available for use) on the date of initial release or broadcast (Sec. 2(f))
What Changes
The federal tax code now treats sound recording productions the same way it treats films, television shows and live theatrical productions for tax expense purposes. Producers gain access to immediate deduction options previously unavailable to them.
Important Definitions
A "qualified sound recording production" means a sound recording produced and recorded in the United States. The bill references the definition of "sound recording" in federal copyright law but does not redefine it.
Effective Date
These changes apply to sound recording productions that begin in tax years ending after the date this bill becomes law.
I
118TH CONGRESS
1ST SESSION H. R. 1259
To amend the Internal Revenue Code of 1986 to provide for an election
to expense certain qualified sound recording costs otherwise chargeable
to capital account.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 28, 2023
Ms. SA´NCHEZ (for herself and Mr. ESTES) introduced the following bill; which
was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
for an election to expense certain qualified sound record-
ing costs otherwise chargeable to capital account.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Help Independent
4
Tracks Succeed Act’’ or the ‘‘HITS Act’’.
5
SEC. 2. TREATMENT OF CERTAIN QUALIFIED SOUND RE-
6
CORDING PRODUCTIONS.
7
(a) ELECTION TO TREAT COSTS AS EXPENSES.—
8
Section 181(a)(1) of the Internal Revenue Code of 1986
9
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•HR 1259 IH
is amended by striking ‘‘qualified film or television produc-
1
tion, and any qualified live theatrical production,’’ and in-
2
serting ‘‘qualified film or television production, any quali-
3
fied live theatrical production, and any qualified sound re-
4
cording production’’.
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(b) DOLLAR LIMITATION.—Section 181(a)(2) of such
6
Code is amended by adding at the end the following new
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paragraph:
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‘‘(C) QUALIFIED SOUND RECORDING PRO-
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DUCTION.—Paragraph (1) shall not apply to so
10
much of the aggregate cost of any qualified
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sound recording production, or to so much of
12
the aggregate, cumulative cost of all such quali-
13
fied sound recording productions in the taxable
14
year, as exceeds $150,000.’’.
15
(c) NO OTHER DEDUCTION OR AMORTIZATION DE-
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DUCTION ALLOWABLE.—Section 181(b) of such Code is
17
amended by striking ‘‘qualified film or television produc-
18
tion or any qualified live theatrical production’’ and insert-
19
ing ‘‘qualified film or television production, any qualified
20
live theatrical production, or any qualified sound recording
21
production’’.
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(d) ELECTION.—Section 181(c)(1) of such Code is
23
amended by striking ‘‘qualified film or television produc-
24
tion or any qualified live theatrical production’’ and insert-
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•HR 1259 IH
ing ‘‘qualified film or television production, any qualified
1
live theatrical production, or any qualified sound recording
2
production’’.
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(e) QUALIFIED SOUND RECORDING PRODUCTION
4
DEFINED.—Section 181 of such Code is amended by re-
5
designating subsections (f) and (g) as subsections (g) and
6
(h), respectively, and by inserting after subsection (e) the
7
following new subsection:
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‘‘(f) QUALIFIED SOUND RECORDING PRODUCTION.—
9
For purposes of this section, the term ‘qualified sound re-
10
cording production’ means a sound recording (as defined
11
in section 101 of title 17, United States Code) produced
12
and recorded in the United States.’’.
13
(f) BONUS DEPRECIATION.—
14
(1) QUALIFIED
SOUND
RECORDING
PRODUC-
15
TION
AS
QUALIFIED
PROPERTY.—Section
16
168(k)(2)(A)(i) of such Code is amended—
17
(A) by striking ‘‘or’’ at the end of sub-
18
clause (IV), by adding ‘‘or’’ at the end of sub-
19
clause (V), and by inserting after subclause (V)
20
the following:
21
‘‘(VI) which is a qualified sound
22
recording production (as defined in
23
subsection (f) of section 181) for
24
which a deduction would have been al-
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•HR 1259 IH
lowable under section 181 without re-
1
gard to subsections (a)(2) and (h) of
2
such section or this subsection,’’; and
3
(B) in subclauses (IV) and (V) (as amend-
4
ed) by striking ‘‘without regard to subsections
5
(a)(2) and (g)’’ both places it appears and in-
6
serting ‘‘without regard to subsections (a)(2)
7
and (h)’’.
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(2) PRODUCTION PLACED IN SERVICE.—Section
9
168(k)(2)(H) of such Code is amended by striking
10
‘‘and’’ at the end of clause (i), by striking the period
11
at the end of clause (ii) and inserting ‘‘, and’’, and
12
by adding after clause (ii) the following:
13
‘‘(iii) a qualified sound recording pro-
14
duction shall be considered to be placed in
15
service at the time of initial release or
16
broadcast.’’.
17
(g) CONFORMING AMENDMENTS.—
18
(1) The heading for section 181 of such Code
19
is amended to read as follows: ‘‘TREATMENT OF
20
CERTAIN QUALIFIED PRODUCTIONS.’’.
21
(2) The table of sections for part VI of sub-
22
chapter B of chapter 1 of such Code is amended by
23
striking the item relating to section 181 and insert-
24
ing the following new item:
25
‘‘Sec. 181. Treatment of certain qualified productions.’’.
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•HR 1259 IH
(h) EFFECTIVE DATE.—The amendments made by
1
this section shall apply to productions commencing in tax-
2
able years ending after the date of the enactment of this
3
Act.
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Æ
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