Details of Public Law 119-21, section 70434 , One Big Beautiful Bill Act

This provision adds “qualified sound recording production” to the list of expenses, up to $150,000 per year, that a taxpayer can elect to treat as a deduction. Any qualified sound recording production costs a taxpayer elects be taken as a deduction, would not be allowed a deprecation or amortization deduction.

This provision defines the term “qualified sound recording production” to mean sound recordings that are made from the fixation of a series of musical, spoken, or other sounds, not including sounds accompanied by a motion picture or other audio-visual work, produced and recorded in the United States as defined under Title 17 of the United State Code Section 101. The fixation of a series of musical, spoken, or other sounds, not including sounds accompanied by a motion picture or other audio-visual work, produced and recorded in the United States as defined under Title 17 of the United State Code Section 101.

This provision adds qualified sound recording productions to qualified property for purposes of the special allowance rules for bonus deprecation. For purposes of this provision, the place in service date for a qualified sound recording production asset will be the date of initial release or broadcast.

Under the PITL, for taxable years beginning on or after January 1, 2025, California law, as it relates to the Modified Accelerated Recovery System (MACRS) in general, conforms to IRC section 168 as of the specified date of January 1, 2025, with modifications, and specifically does not conform to the special allowance rules for bonus depreciation. As a result, California does not conform to the changes made by this provision.

Under the CTL, California does not conform to federal MACRS depreciation. Instead, the CTL is generally in substantial conformity to the pre-1981 federal asset depreciation range (ADR) rules, which generally allow property to be depreciated based on its useful life. The CTL does not conform to this provision.

Additionally, under the PITL and the CTL, California does not conform to the federal election to deduct the cost of any qualifying film and television production in the year the expenditure is incurred in lieu of capitalizing the cost and recovering it through depreciation allowances. Instead, under both the PITL and the CTL, California generally conforms to the federal income-forecast method to determine the depreciation recovery periods of property such as films, videotapes, television, book rights, patents, master sound recordings, video games, and like items. As a result, California does not conform to the changes made by this provision.