I'm producing a short film, and I have an interested investor, but he would only like to invest if he could claim the donation as tax deductible. I can't seem to find any info about how he can do this if we don't have a 501(c)(3) set up since it's a short film. Anyone have any ideas?
Financing / Crowdfunding : Tax deductible donation by J.C. De Leon
Tax deductible donation
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If you have a company and he does a loan or investment to this company with a documented contract, then there can be tax implications. But I would not go any further without consult from a lawyer. The deal has to be structured properly for any sort of potential write-off. Typically, a "donation" is not an allowed write-off without 501(c) status - and most film production is not charitable or done through non-profits. It's worth a few bucks to consult a lawyer. Don't burn bridges or create more problems for yourself by trying to go that one alone. Seek out real legal advice.
Christopher is correct. Just because a film company will not make money doesn't mean it qualifies as a non-profit. By its very nature a production company is set up to make a profit - even if it doesn't. I do not believe a donation of this sort can be considered tax deductible. Take a look at U.S. Code § 181.
There are many ways. The one that comes to mind right-off is to produce your film using student cast/crew from a Com Collage, University or High School. They all/most are 501c3 structured so as to be able to do a pass-thru. Look into it.
Where can I look into that, Doug? Are you saying that if I were to make a short film using students from a Com Collage, University or High School my investor/donor could write that off?
I work with a non profit 501 (c) (3) organization that may be willing to help if the project
fits into the mission statement of the foundation. www.faithandfamily.org
D. Nose around in the school's administration. If you pitch it as a teaching proposition, it generally falls under their wide mission statement umbrella.
Doug, so in order to gat a tax deduction using students from a Com Collage, University or High School I would have to pitch me being a teacher and make the short film as part of the school curriculum? Is that something done often? Seems almost shady. Do you have personal experience doing this?
D, I don't think that you would need a teaching certificate but the school may need a certified teacher on board your project. Also, most communities have Public Access Television stations that fall under the 501c3 umbrella (often in conjunction with a school.)
Contact The Film Collaborative, they have also a distribution arm that will consider your finished film. Best luck
Find a fiscal agent. That's a non-profit that will act as your sponsor. Then he can donate the money to them. You will end up falling under their charter and you should be making the film for them to exploit, not yourself, but that's how you get around this.
Does he own a business? Could you advertise something for him? Not a donation but a business expense. You don't need a lawyer, you need an accountant.
www.nyfa.org Once you are tax deductible the person is no longer an investor, but a donor.