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Can I pay a referral fee to accountants, lawyers or hedge funds for PASSIVE income Investors?

Los Angeles, CA |

I am trying to secure funding for a movie under IRS section 181 that allows individuals or business's with PASSIVE income to write off 100% of their investment. Can I pay a generous referral fee?

Thanks.

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Filed under: Tax law
Attorney answers 2

Posted

Depends on what the referal fee is for? You need to explain this situation more. If it is just a referal for investors that would be acceptable.

Asker

Posted

Yes, just a referral fee for suitable Investors - Thanks!

Posted

You can pay a referral fee. The question is whether teh lawyers and accountants can ethically receive the referral fees. I believe you will find that the answer is for both professions that the answer is "yes" as long as they fully disclose the receipt of the fee. However, i think that you will also find that neither the lawyers nor the accountants are going to want to receive referral fees for advising a client to invest in a movie. Nothing good is going to come from that for the professional. The professional is better off sticking with what he or she is good at. At most if a client invests $100,000, how much of a referral fee will you pay? $5,000? Great. So if the deal goes poorly, the client sues for $100,000. And the professional loses the client. Not a good result for the professional.

Asker

Posted

Thanks for your response, To be a little more concise, I was thinking more like a 20% referral fee and ONLY for Investors with PASSIVE income and who can write off 100% of their investment under Section 181. If they can't write 100% off, yes I agree no good can come of it but if I had passive income tax liability and had a choice of paying the IRS or investing in a movie with at least a slight chance of a return, I would want my adviser to tell me about Section 181. Under this scenario I think that all parties can benefit or am I missing something? Thanks.

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