I 
109TH CONGRESS 
2D SESSION 
H. R. 6284 
To amend the Internal Revenue Code of 1986 to allow a loss for development 
costs of certain creative property. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 29, 2006 
Mr. BECERRA introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to allow a 
loss for development costs of certain creative property. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. ALLOWANCE OF LOSS DEDUCTION FOR DEVEL-
OPMENT 
COSTS 
OF 
CERTAIN 
CREATIVE 
PROPERTY. 
(a) FILM DEVELOPMENT COSTS.—Section 165 of the 
Internal Revenue Code of 1986 (relating to loss deduc-
tions) is amended by redesignating subsection (m) as sub-
section (n) and inserting the following new subsection: 
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‘‘(m) FILM DEVELOPMENT COSTS.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—If a creative property is not 
set for production within the 3-year period beginning 
on the date on which the taxpayer first incurs devel-
opment costs with respect to the property— 
‘‘(A) the costs of developing such property 
shall be treated as an expense which is not 
chargeable to capital account, 
‘‘(B) any cost so treated shall be allowed 
as a deduction, and 
‘‘(C) such deduction shall be treated as a 
loss allowable under subsection (a) for the first 
taxable year beginning after the end of such 3- 
year period unless it is established that the tax-
payer did not intend to dispose of the property. 
‘‘(2) RECAPTURE.—The Secretary shall, by reg-
ulations, provide for recapturing the benefit of any 
loss allowable under this subsection if— 
‘‘(A) the taxpayer begins principal photog-
raphy with respect to the creative property in 
any subsequent taxable year, or 
‘‘(B) the taxpayer derives income from the 
disposition of the creative property (including 
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settlement funds resulting from copyright in-
fringement). 
The taxpayer shall pay interest, computed by deter-
mining the underpayment of tax which would result 
solely from disallowance of such loss in the taxable 
year in which the loss was claimed under paragraph 
(1), using the adjusted overpayment rate (as defined 
in section 460(b)(7)), compounded daily, on the un-
derpayment so determined. The preceding sentence 
shall not apply where the loss claimed under para-
graph (1) was $100,000 or less. 
‘‘(3) DEFINITIONS AND SPECIAL RULES.—For 
purposes of this subsection— 
‘‘(A) CREATIVE
PROPERTY.—The term 
‘creative property’ means the intangible right to 
exploit a screenplay, script, story outline, or 
motion picture production right to a book, play, 
or other similar creative property for purposes 
of potential future film development, production 
and exploitation. 
‘‘(B) FILM.—The term ‘film’ means a fea-
ture film, television special, television series, or 
similar product (including animated films and 
television programming) that is sold, licensed or 
exhibited, whether produced on film, videotape, 
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digital, or other video recording format. Such 
term shall not include any production for which 
records are required to be maintained under 
section 2257 of title 18, United States Code, 
with respect to any performer in such produc-
tion. 
‘‘(C) DEVELOPMENT
COSTS.—The term 
‘development costs’ means costs that are in-
curred to acquire, develop, or evaluate whether 
to exploit creative property. 
‘‘(D) SET FOR PRODUCTION.—A creative 
property shall not be treated as set for produc-
tion until a commitment to fund production is 
made and active pre-production has begun.’’. 
(b) EFFECTIVE DATE.— 
(1) IN
GENERAL.—The amendment made by 
subsection (a) shall apply to taxable years ending 
after the date of the enactment of this Act. 
(2) CHANGE IN METHOD OF ACCOUNTING.—In 
the case of any taxpayer required by the amendment 
made by subsection (a) to change its method of ac-
counting for its first taxable year ending after the 
date of the enactment of this Act— 
(A) such change shall be treated as initi-
ated by the taxpayer, and 
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(B) such change shall be treated as made 
with the consent of the Secretary of the Treas-
ury. 
Æ 
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