Screenplay and SAG fees

[DaveinTexas]

I have two questions for the board; I wish I had more clients in this industry but I don't.

1. How do you treat the sale of a screenplay? My client created the screenplay from his own efforts however it is not a musical work; it is a movie screenplay to be sold to a movie production company. Is it NEC or the sale of a capital asset?

2. My client will receive monies on the "back-end" sales/distribution of this movie. He will also be providing services to the production company such as consulting and any re-writes that will be done during production. He must be enrolled/member of the Screen Actor's Guild which provides protection, insurance and other rights to work in the film industry; much like a Union Due or Membership Fees. The one time fee is $23,000; would you amortize this as a capital asset as it's benefits are ongoing or expense it fully in the first year?

Thanks for the help. I don't have any experience regarding the taxation of this industry. Any references or guides you can point me to would be great. TIA.

[DTS]

Davein Texas

Check this out. I was searching for musicians and ran across this before I found what I needed. It's an easy read. It will provide you with most of the answers you need, I'm sure.

http://www.unclefed.com/SurviveIRS/MSSP/entertainment.pdf

Please let me know if this helped you.

D

[DaveinTexas]

Thanks D

It's funny; I just found this exact document a few minutes ago.

It was written in 1995; I suppose since there are no revisions on the IRS website that the same rules apply. This is exactly what I needed to navigate through these questions.

Thanks.

[DTS]

This is exactly what I needed to navigate through these questions.

You're going to be amazed how money is paid out through the different entities, here and there, a little of this and a little of that...so, try and read between the lines a bit and you'll see what the IRS is looking for and will provide you good questions to ask your client.

D