'PERFORMING ARTS' DOESN'T INCLUDE MOTION PICTURE DIRECTOR'S SERVICES, IRS RULES.

UIL Number(s) 0448.00-00

                                             Date: January 4, 1994

Whether the Taxpayer is involved in the performance of services in the field of the performing arts within the meaning of section 448(d)(2)(A) of the Internal Revenue Code.

FACTS

Taxpayer is a corporation that employs the services of a director of motion pictures who is required to provide services exclusively to Taxpayer. Taxpayer enters into contracts to provide the director's services to others. Taxpayer will inform the director of the picture to which the Taxpayer has contracted and the director will then carry out the assigned work.

LAW AND RATIONALE

Section 448(d)(2) of the Code provides that a "qualified personal service corporation" means any corporation that meets both the function test of section 448(d)(2)(A) and the ownership test of section 448(d)(2)(B). To meet the function test, substantially all of the activities of the corporation must involve the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting.

Section 1.448-1T(e)(4)(iii) of the Temporary Income Tax Regulations provides that the performance of services in the field of performing arts means the provision of services by actors, actresses, singers, musicians, entertainers, and similar artists in their capacity as such. The performance of services in the field of the performing arts does not include the provision of services by persons who themselves are not performing artists (e.g., persons who may manage or promote such artists, and other persons in a trade or business that relates to the performing arts).

The term "performing arts" is generally defined as arts such as drama, dance, and music that involve performance before an audience. See, Webster's New World Dictionary, Second College Edition. Although the list of performing artists in section 1.448-1T(e)(4)(iii) is not inclusive, only persons who perform for an audience will be considered to perform services in the field of the performing arts. Persons who perform services that relate to the performing arts, but who do not perform before an audience, will not be considered to perform services in the field of the performing arts.

Although a director may contribute artistic skills to the production of a motion picture the activities of a director do not involve performing before an audience. The activities of a motion picture director are related to the performance of services by actors and actresses. Section 1.448-1T(e)(4)(iii) provides that related activities will not satisfy the function test of section 448(d)(2)(A).

CONCLUSION

Taxpayer is not involved in the performance of services in the field of the performing arts within the meaning of section 448(d)(2)(A) of the Code.

A copy of this technical advice memorandum is to be given to the taxpayer. Section 6110(j)(3) of the Internal Revenue Code provides that it may not be used or cited as precedent.