Weller Bill to Allow Credit for Digital TV Postproduction Equipment

"Postproduction companies need help dealing with a government mandate which, without our assistance, may put many of these small, technology related businesses out of business," Weller told the House. The proposed credit would provide for a 20 percent credit for current capital expenses incurred for digital postproduction machinery and equipment, "less a floor equal to their average annual gross receipts from digital postproduction services for the prior four years," he said. The credit would sunset at the effective date of a 1996 Federal Communications Commission mandate for a new terrestrial digital television standard, Weller noted.

On December 24, 1996, the FCC mandated a new terrestrial Digital Television standard, replacing the one that existed for 50 years. While adopting an Advanced Television Systems Committee (ATSC) standard, the FCC did not designate a single transmission format. As a result, the postproduction industry has already invested in millions of dollars worth of equipment to be used in creating High Definition (HD) Broadcasting. Without HD broadcasting, the U.S. will be surrendering the advanced research and technological position which has sustained the preeminence of the American entertainment and information industry.

The FCC specifically chose not to mandate a single digital display format. I agree that diversity in formats is a logical way to proceed by allowing the marketplace to decide on the best format(s). However, for the postproduction process the complexities created by the requirement to support these new standards has exponentially increased the cost and complexity of their transition to digital television in the short run.

The legislation will help to keep the domestic digital postproduction industry strong. The proposed tax credit would provide for a 20 percent credit for current capital expenses incurred for digital postproduction machinery and equipment less a floor equal to their average annual gross receipts from digital postproduction services for the prior four years. The taxpayer would reduce the depreciable basis of the equipment by the credit claimed. Additionally, the credit would sunset at the effective date of the FCC mandate.

Mr. Speaker, I ask my colleagues to join me in cosponsoring this important legislation.