As the U.S. braces for the coronavirus COVID-19 pandemic, companies across a broad range of industries are increasingly affected by the growing restrictions on travel and trade. Practically speaking, concerns abound over issues like whether airlines will issue refunds for cancelled flights, or what happens to manufacturers who source materials from Asia. Indeed, the entertainment industry is not immune either. For instance, what if a production contract calls for filming in Hong Kong next week? What if talent is unable to leave their home country for a concert tomorrow? What if, heaven forbid, talent is under mandatory quarantine while recovering from the virus? At times like these, the answers usually lie in the contracts, specifically in a powerful provision that is often underestimated because it is only invoked in the unlikeliest of scenarios: the force majeure clause.
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California
IRC Section 181 is Back!
By Shane P. Nix & Ilia Katz on
Posted in California, Tax
As quickly as cameras flash at the Oscars, Congress passed the Tax Cuts and Jobs Act (“TCJA”) and left taxpayers holding the bag in some areas. Unlike in the movies, taxpayers cannot do a reshoot if the first take is not perfect. After almost two years, Congress may again pass additional legislation within a 48-hour period, which may resolve certain issues that have arisen in Hollywood since the TCJA.
On December 18, 2019, the House passed tax legislation as part of an omnibus package that included, among other things, extending Internal Revenue Code Section 181 (“Section 181”) retroactively from 2018 through 2020, which ultimately means that taxpayers may be able to elect Section 181 treatment for the 2019 and 2020 tax years. The Senate is expected to pass this legislation on December 19, 2019. Many taxpayers may wonder, “why do we need Section 181 if qualified U.S. film/TV productions (and live theatrical productions) already are eligible for bonus depreciation under the TCJA?”
For those who have already forgotten about Section 181, prior to the TCJA production companies were eligible to elect to deduct production expenses of certain qualified U.S. film/TV productions (and live theatrical productions) as and when incurred (subject to a $15m cap) in lieu of recovering such costs over a 10-year period. While Congress did not renew Section 181 beyond December 31, 2017, the TCJA included such qualified productions as property eligible for bonus depreciation.
Does Elon Musk’s Defamation Defense Verdict Spell “Open Season” for Social Media Insults? Answer: Nope.
By Lee S. Brenner & Whitney L. Tolar on
On December 6, a federal jury in the Central District of California found that Tesla CEO Elon Musk did not defame cave diver Vernon Unsworth by referring to him in a tweet as “pedo guy.” Unsworth v. Musk, No. 2:18-cv-08048 (C.D. Cal. Dec. 6, 2019). Unsworth, who helped rescue a boys’ soccer team from a flooded cave in Thailand in July 2018, alleged that a series of tweets Musk published to his nearly 30 million Twitter followers were defamatory, falsely accused Mr. Unsworth of being a pedophile and child rapist, and caused Unsworth worldwide damage to his reputation and emotional distress. The jury deliberated for less than one hour before finding in favor of Musk.
During a CNN interview following the 2018 rescue, Unsworth had criticized Musk’s showing up to the cave site with a mini-submarine as a “PR stunt,” and said that the mini-submarine “had absolutely no chance of working” to save the boys. Unsworth’s complaint alleged that Musk retaliated against this criticism with a series of defamatory tweets and a series of defamatory emails sent to a Buzzfeed News reporter.
Assembly Bill 5: Guilds Issue Joint Statement Advocating for Continued Use of Loan-Outs
By Alan J. Epstein, Daniel P. Hoffer & Ilia Katz on
This Article is part of a series monitoring developments with regard to California Assembly Bill 5 and its impact on the entertainment industry.
California Governor Gavin Newsom recently signed into law Assembly Bill 5 (“AB5” or the “Bill”), which redefines the distinction between an employee and an independent contractor. AB5 is primarily targeted at gig economy companies such as Uber and Grubhub, whose workers had been classified as independent contractors up to this point. Proponents of AB5 argued that many gig economy workers worked full time but received none of the benefits commonly associated with full time employment—including overtime, minimum wage, and workers’ compensation. Consequently, AB5 was touted as providing increased benefits and rights to a growing gig economy workforce. An additional impetus for AB5 was the legislature’s desire to stem financial losses to the state as a result of worker misclassification, including the loss of tax revenues.