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With the passing of the Tax Cuts & Jobs Act of 2017, actors, writers, producers, and other entertainment professionals who receive W-2’s were no longer able to deduct the costs of union dues, agent commissions, talent managers, legal and professional fees, and other ordinary business expenses on a personal Federal tax return. Considering this negative impact of tax reform, an alternative might be to form a loan-out corporation to deduct these business expenses.
Under a loan-out corporation, professionals would essentially be an employee of the entity and the corporation would “loan out” services to the movie, TV show, or other. Using this tax strategy, The loan-out corporation would be receiving income instead of the individual, therefore, allowing deductions for all ordinary business expenses.
Another advantage of a loan-out corporation is that a pension plan can be setup under the loan-out corporation. The pension contribution under the loan-out corporation can be discretionary and flexible depending on income and cash-flow and the contribution is completely tax-deductible.
In addition to loan-out corporation services, we also provide a full suite of catered, industry-specific services including wealth management, accounting, and additional integrated tax solutions. » Learn more