Bill Summary
The HITS Act, or "Help Independent Tracks Succeed Act", is a bill that aims to amend the Internal Revenue Code of 1986. Its purpose is to allow for an election to expense certain qualified sound recording costs that would normally be charged to capital account. This means that instead of recording these costs as an asset, they can be immediately deducted as an expense. The bill also sets a dollar limitation of $150,000 for these expenses and prohibits any other deductions or amortization deductions for these productions. The definition of a qualified sound recording production is also included in the bill. Additionally, the bill allows for bonus depreciation for these productions and makes conforming amendments to other sections of the Internal Revenue Code. These changes would take effect for productions starting in taxable years after the bill is enacted.
Possible Impacts
1. This legislation may affect independent musicians or small record labels by allowing them to deduct up to $150,000 in sound recording production costs. This could potentially help them financially and allow them to invest more in their music.
2. The "HITS Act" may also benefit the overall music industry by incentivizing production and encouraging more artists to release music in the United States. This could potentially lead to a boost in the economy and job creation within the industry.
3. However, the limitation of $150,000 for deducting sound recording production costs may also have a negative impact on larger record labels or artists who have higher production costs. This could lead to potential financial struggles for these individuals or companies.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 4955 Introduced in Senate (IS)]
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116th CONGRESS
2d Session
S. 4955
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 SENATE OF THE UNITED STATES
December 3, 2020
Mrs. Feinstein (for herself and Mrs. Blackburn) introduced the
following bill; which was read twice and referred to the Committee on
Finance
_______________________________________________________________________
A BILL
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Help Independent Tracks Succeed
Act'' or the ``HITS Act''.
SEC. 2. TREATMENT OF CERTAIN QUALIFIED SOUND RECORDING PRODUCTIONS.
(a) Election To Treat Costs as Expenses.--Section 181(a)(1) of the
Internal Revenue Code of 1986 is amended by striking ``qualified film
or television production, and any qualified live theatrical
production,'' and inserting ``qualified film or television production,
any qualified live theatrical production, and any qualified sound
recording production''.
(b) Dollar Limitation.--Section 181(a)(2) of such Code is amended
by adding at the end the following new paragraph:
``(C) Qualified sound recording production.--
Paragraph (1) shall not apply to so much of the
aggregate cost of any qualified sound recording
production, or to so much of the aggregate, cumulative
cost of all such qualified sound recording productions
in the taxable year, as exceeds $150,000.''.
(c) No Other Deduction or Amortization Deduction Allowable.--
Section 181(b) of such Code is amended by striking ``qualified film or
television production or any qualified live theatrical production'' and
inserting ``qualified film or television production, any qualified live
theatrical production, or any qualified sound recording production''.
(d) Election.--Section 181(c)(1) of such Code is amended by
striking ``qualified film or television production or any qualified
live theatrical production'' and inserting ``qualified film or
television production, any qualified live theatrical production, or any
qualified sound recording production''.
(e) Qualified Sound Recording Production Defined.--Section 181 of
such Code is amended by redesignating subsections (f) and (g) as
subsections (g) and (h), respectively, and by inserting after
subsection (e) the following new subsection:
``(f) Qualified Sound Recording Production.--For purposes of this
section, the term `qualified sound recording production' means a sound
recording (as defined in section 101 of title 17, United States Code)
produced and recorded in the United States.''.
(f) Bonus Depreciation.--
(1) Qualified sound recording production as qualified
property.--Section 168(k)(2)(A)(i) of such Code is amended--
(A) by striking ``or'' at the end of subclause
(IV), by adding ``or'' at the end of subclause (V), and
by inserting after subclause (V) the following:
``(VI) which is a qualified sound
recording production (as defined in
subsection (f) of section 181) for
which a deduction would have been
allowable under section 181 without
regard to subsections (a)(2) and (h) of
such section or this subsection,''; and
(B) in subclauses (IV) and (V) (as amended) by
striking ``without regard to subsections (a)(2) and
(g)'' both places it appears and inserting ``without
regard to subsections (a)(2) and (h)''.
(2) Production placed in service.--Section 168(k)(2)(H) of
such Code is amended by striking ``and'' at the end of clause
(i), by striking the period at the end of clause (ii) and
inserting ``, and'', and by adding after clause (ii) the
following:
``(iii) a qualified sound recording
production shall be considered to be placed in
service at the time of initial release or
broadcast.''.
(g) Conforming Amendments.--
(1) The heading for section 181 of such Code is amended to
read as follows: ``treatment of certain qualified
productions.''.
(2) The table of sections for part VI of subchapter B of
chapter 1 of such Code is amended by striking the item relating
to section 181 and inserting the following new item:
``Sec. 181. Treatment of certain qualified productions.''.
(h) Effective Date.--The amendments made by this section shall
apply to productions commencing in taxable years ending after the date
of the enactment of this Act.
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