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Are fuel purchases eligible for tax credits?
Fuel purchases made in Louisiana will be eligible for tax credits, subject to a reduction of 0.20 cents per gallon for payment of state sales tax which is a non-qualifying expenditure under Act 478. For example, if a production purchases 100 gallons of gas @ $2.50 per gallon for a total of $250.00, it must deduct $20 (100 gallons x 0.20 cpg), leaving a net amount of $230 eligible for tax credits.
Can the immediate write-offs be taken in more than one year?
Yes, if an election is made to use the incentive, the immediate deduction takes place in the year the expenditure is incurred. Therefore, if production expenditures are incurred in more than one year, the immediate tax deduction will be taken in more than one year.
Do fringes qualify?
Do Insurance premiums qualify as an expenditure?
In order for Insurance premiums to qualify as an expenditure for the purposes of earning Louisiana Motion Picture Production tax credits, the insurance company must have a physical office in Louisiana, be duly licensed to write insurance in Louisiana and any premiums collected must be subject to the Louisiana insurance premium tax. Only the amounts collected and subject to Louisiana taxes will qualify.
Do you accept loan outs?
Does “local spend” include bond fees and per diems?
Bond Fees? Yes, as long as it is purchased from a Louisiana company. Per diems? Yes.
Does local spend include Finance Fees?
Yes, as long as the finance fees are not associated with a related party transaction.
Does local spend include foreigners working in Louisiana?
The 30% credit includes the entire spend on payroll (above and below the line) regardless of where the cast or crew are domiciled. To earn an additional 5% on local hire payroll, that labor must be a resident of Louisiana (which is defined as a person with permanent residence in Louisiana for at least six months of the year).
Will Louisiana run out of funds for the incentive program?
No chance. As long as there is tax liability in Louisiana, there will be a market for tax credits.
How do I know if it’s a Louisiana spend?
Services will qualify if performed in Louisiana. Goods will qualify if purchased through a source in Louisiana. A source is a physical nexus with at least one full time employee. Additionally, if a good is obtained through a production services company, there must be a mark-up on the price and state sales and/or use tax charged to the production.
How does a tax credit work?
A tax credit can be applied toward Louisiana state income tax. Since most motion picture investors do not have Louisiana tax liability, the credit can not be personally utilized. This is why the tax credit is fully transferable. Anyone may purchase the tax credit. Generally, tax credit brokers purchase a motion picture project’s earned tax credits.
How is a Louisiana resident defined?
Any person domiciled in the state of Louisiana and any other person who maintains a permanent place of abode within the state and spends in the aggregate more than six months of each year within the state is considered a Louisiana resident.
How long do I have to start production once I receive initial certification?
How will other practical issues related to this broadened incentive be determined?
Like other tax issues, producers should consult with their professional tax advisors on any issues related to this new Federal tax incentive. In light of the new legislation, the Treasury and IRS may revise their temporary regulations, which may come in the form of Notices and Regulations. A number of groups that worked on this important legislative change are expected to continue working with the Treasury Department and the IRS to ensure the incentive fulfills its objective and provides the industry with meaningful tax relief.
I heard the credits are going to sunset. Is that true?
No. As a result Act 478, our tax credits are now permanent.
If the incentive is based on location spend what exactly does “in-state spend” mean?
Location spend includes pre-production, production, & post-production expenditures directly incurred in Louisiana that are used in a state-certified production; including without limitation expenses such as above-the-line and below-the-line expenses, equipment rental & purchases, travel, props, location fees, payroll, editing, and sound mixing.
Must a certain percentage of crew be Louisiana residents?
Spending in Louisiana started before receiving initial certification. Can expenses still be claimed?
Yes. Expenditures are creditable for at least one year prior and one year after initial certification.
What do tax credits typically sell for?
Tax credits usually sell between 80 and 90 cents on the dollar.
What does not qualify for the 30% credit?
Money that is spent outside of Louisiana or expenditures that are indirect or not production-related do not qualify for the tax credit. For example, money spent renting a Ferrari in Louisiana as a prop for a production is acceptable. The indirect costs of buying a Ferrari, which clearly has value outside of the production, will not qualify. Expenditures from a “pass through” or company with no Louisiana resident employees and/or physical address that does not maintain actual office hours will not qualify. Also, your application fee and costs for transferring credits or marketing and distribution expenditures.
What does not qualify for the additional 5% credit?
Payroll for non-residents as well as the pay for anyone not on the direct payroll of the production do not qualify for the additional 5% credit.
What if I haven’t secured distribution yet?
We only require that there be a commercial multi-market distribution plan, not a distribution agreement in place.
What if I take a Louisiana crew to another state?
Sorry! We can only give credits for work performed in Louisiana.
What if my project doesn’t meet the minimum threshold?
Consider slating more than one production shot in Louisiana together within one year in order to meet the minimum threshold.
What qualifies for the 30% credit?
Only money spent on your production costs within the borders of the state of Louisiana will qualify for the 30% tax credit. That includes production payroll for residents and non-residents alike; as long as it’s for work performed in Louisiana. Yes, even your audit fees can now qualify. The law gives specific examples of acceptable production expenditures:
Act 478 gives some specific examples of acceptable production expenditures" means preproduction, production, and postproduction expenditures directly incurred in this state that are directly used in a state-certified production, including without limitation the following: set construction and operation; wardrobes, make-up, accessories, and related services; costs associated with photography and sound synchronization, lighting, and related services and materials; editing and related services; rental of facilities and equipment; leasing of vehicles; costs of food and lodging; digital or tape editing, film processing, transfer of film to tape or digital format, sound mixing, special and visual effects; total aggregate payroll; music, if performed, composed, or recorded by a Louisiana musician, or released or published by a Louisiana-domiciled and headquartered company; airfare, if purchased through a Louisiana-based travel agency or travel company; insurance costs or bonding, if purchased through a Louisiana-based insurance agency; or other similar production expenditures as determined by rule.
What qualifies for the additional 5% credit?
To the extent that base investment is expended on payroll for Louisiana residents employed in connection with a state-certified production, each investor shall be allowed an additional tax credit of 5% for payroll. According to Act 478, "Payroll" shall include all salary, wages, and other compensation including related benefits sourced or apportioned to Louisiana. However, if the payroll to any one person exceeds one million dollars, this additional credit shall exclude any salary for that person that exceeds one million dollars.
What’s the minimum threshold to qualify?
Who can use motion picture tax credits?
All entities taxed as corporations for Louisiana income tax purposes and all individuals, estates, and trusts in Louisiana can use motion picture tax credits.