Posted 26 October, 2008 in FilmUSA
Posted 19 October, 2008 in CA News
By Jerry Berrios, Staff Writer
Article Last Updated: 10/12/2008 11:46:58 PM PDT
http://www.dailynews.com/business/ci_10706865
The $700 billion bailout plan passed this month gives Hollywood $478 million in tax breaks, which entertainment industry leaders hope will help stem the tide of runaway production.
But experts also say these long-awaited tax breaks need to be combined with state and local incentives in order to actually lure productions back to the Golden State and, particularly, Los Angeles.
“Policymakers just can’t take it for granted and assume that everyone wants to be in Los Angeles,” said Eduardo Martinez, an economist with the Los Angeles County Economic Development Corp. “The recent move of ‘Ugly Betty’ is a good example of that.”
The hit ABC-TV show moved filming this season from Los Angeles to New York, taking advantage of the 35 percent tax credit extended to production companies.
Los Angeles and California offer some tax incentives, but they are nowhere near the levels offered by New York and other locales. And given the budget problems facing California and its local governments, that situation isn’t likely to change any time soon, Martinez said.
In addition to such perks as tax incentives, more than 40 other states are cultivating relationships with the entertainment industry by offering production-related programs at their vocational schools and universities, he said.
Nearly a decade ago, the Screen Actors Guild and the Directors Guild of America estimated that runaway production had a $10.3 billion impact on the U.S. economy. While no official follow-up study has been conducted, officials have complained about production companies fleeing to less- expensive locations such as Vancouver, as well as Ireland, Australia, New Zealand and Eastern Europe.
The Motion Picture Association of America and the Directors Guild of America have been lobbying for federal tax breaks for some time. The incentives were included in a tax-credit extension bill tacked onto the $700 billion bailout.
It allows all production companies to claim a $15 million deduction per movie during the first year of filming. The credit climbs to $20 million if the company films in an economically depressed area.
Previously, the credit applied only to productions with total budgets below $15 million, or $20 million in a poor area.
“It is more of a tool to attract financing for motion pictures projects, which is always a struggle,” said Amy Lemisch, director of the California Film Commission. “Any enticement for that is a good thing.”
Another provision dealing with employee categories and production and distribution partnerships allows the entertainment industry to pay a lower tax rate.
“This puts our industry, which employs 1.5 million Americans, on equal footing under the tax code with other leaders of the U.S. economy and will help keep jobs and film production here in the United States,” Dan Glickman, chairman and chief executive officer of the Motion Picture Association of America, said in a statement.
U.S. Rep. Howard Berman, D-Van Nuys, supported the $15 million deduction, commonly known as the runaway production provision.
“Many foreign countries from Canada to Ireland to New Zealand offer financial incentives to producers to take productions abroad and jobs with them,” said Gene Smith, Berman’s spokeswoman. “This provision is to provide financial incentives to keep those jobs in the United States.”
The nonprofit LAEDC predicts that movie and TV production will employ an average of 151,800 workers a month this year, down from 157,800 in 2007. Martinez attributed the decrease to the 100-day writers strike and the subsequent Screen Actors Guild negotiations with the studios.
The organization does expect employment to rebound to a monthly average of 159,700 in 2009, but only if the studios and SAG agree on a contract and the economy rebounds.
The number of feature films made in Los Angeles has steadily declined since 1996 except for a few anomalies, said Todd Lindgren, vice president of communications for FilmL.A., a private nonprofit organization that processes film permits for the city, county, school districts and other entities.
“That means there are fewer jobs,” he said. “There is less money that is pumped into the local economy.”
But there are new opportunities on the horizon.
Commonwealth Studios is moving ahead with its plans for a $125 million production complex on the outskirts of Moorpark.
Long Beach Studios has announced it will build what it calls the world’s largest independent production complex on the 77-acre site of a defunct Boeing plant it purchased.
And in August, Avenue Six Studios opened a 20,000-square-foot film and TV production studio in Van Nuys with ABC-TV’s “Lost” as one of the first clients.
Last week, Marvel Studios announced that it will film its next four movies – “Iron Man 2,” “Thor,” “The First Avenger: Captain America” and “The Avengers” – at Raleigh Studios in Manhattan Beach.
“We are still the capital of the world for filming and production,” said Martinez, of the LAEDC. “We are always going to have a critical mass compared to the rest of the states, the rest of the country and the rest of the world.”
These latest measures to curb runaway production come as Los Angeles is poised to celebrate its film centennial next year 2009. The city’s first movie “In the Sultan’s Power” was filmed in 1909 in downtown L.A.
“Here we are 100 years later,” FilmL.A.’s Lindgren said. “There is no guarantee that in a 100 hundred years it will be one of the drivers of our local economy.”
Posted 12 October, 2008 in CA News
Please look at the following petition & sign if you agree. It will bring more film business to CA at no cost to taxpayers or the state.
http://www.PetitionOnline.com/SDFILM/petition.html
Posted 12 October, 2008 in OK News
In Oklahoma’s efforts to keep you informed of our activities as well as recent developments in our film and music industries, please click on the following link to the Oklahoma Film & Music Office’s website where you may view the Monthly Report for September 2008, which contains an overview of the legislative agenda:
http://www.oklahomafilm.org/uploads/Activity%20Report%20-%20SEPTEMBER%202008.pdf
This report is prepared monthly for the Oklahoma Tourism Commission and the Film & Music Advisory Board, our two governing bodies. Some of the information included in the reports:
+ Production/Events
+ Industry Services and Technology Development
+ Production/Potential Production in the state
+ Legislative Updates
+ Media Mentions/Press/Ads that ran in a particular month
+ Upcoming Activities
Posted 12 October, 2008 in FilmUSA
U.S. SECTION 181 The Federal Bail-out Plan has extended the sunset of this program for another year, until December 31,2009.
The extenders bill that passed Congress and signed on October 3rd by the President includes the following modifications to the film production incentives under section 181 and section 199.
Modifications to Section 181
1) Section 181, which was scheduled to expire with respect to films commencing after 2008, was extended for an additional year. Thus, the benefits of section 181 apply to the cost of any qualifying film and television production commencing before 2010.
2) Under prior law, the expensing benefits under section 181 generally only applied to films that cost $15 million or less to produce. Thus, because the cost of most films exceeds $15 million, the benefits of section 199 were generally limited to television production. The bill eliminates the eligibility cap on the amount of production costs. Rather, under the bill, up to $15 million of production costs may be immediately expensed under section 181($20 million in the case of production in certain low-income communities or distressed areas), regardless of the aggregate cost of the film. The remaining cost of the film would be recovered under the taxpayer’s normal amortization method (e.g., income forecast).
Modifications to Section 199
1) For purposes of section 199, a “qualified film” would include the copyrights, trademarks and other intangibles with respect to the film. Thus, income from the license of copyrights and trademarks relating to a qualified film would be eligible for the section 199 production benefits.
2) The bill favorably modifies the treatment of certain film production partnerships and film distribution partnerships. First, if a partnership produces a film, the bill would treat any partner that has at least a 20 percent ownership interest in the partnership as a “producer” of the film for purposes of section 199. Thus, the income earned by such a partner from its distribution of a qualified film produced by the partnership generally would be eligible for benefits (as DPGR) under section 199. Similarly, the bill would allow income earned by a partnership from distributing a qualified film to be eligible for section 199 benefits, if a partner having at least a 20 percent interest in the partnership produced the film. Thus, the bill generally overturns Treasury regulations holding that production activities of a partnership could not be attributed to a partner, or vice versa.
3) For purposes of the TIPRA wage limit to section 199, the definition of W-2 wages was changed to include any compensation for services paid to “actors, production personnel, directors and producers.” This change was made to reflect the fact that workers in the film industry may provide services in a capacity other than as employees (e.g., as independent contractors or thru loan-out companies, payroll companies or other arrangements) and thus are not paid “W-2 wages” for such services.
4) The bill specifies that the methods and means of distributing an otherwise qualified film do not impact its eligibility under section 199. Thus, according to a technical explanation of the provision (previously released by Joint Tax), the distribution of a film or programming over the internet (i.e., digital programming) or on broadcast television would be treated as a disposition for purposes of section 199. Thus, the advertising and other income attributable to any such distribution of a qualified film should be eligible for section 199 benefits.
Section 502c)(2) amends IRC section 199(c)(6), which defines the term “qualified film.� The additional language broadens the definition of a “qualified film� to include “copyrights, trademarks and other intangibles.� This in turn broadens the scope of “domestic production gross receipts,� in section 199(c)(4((A)(i)(II), increasing the amount of “qualified production activities income� (section 199(c)(1) against which the 9% (phased in) deduction is allowed under section 199(a).
Posted 12 October, 2008 in WI News
WISCONSIN has enjoyed its best production year ever, with six features completed, in production or in prep, plus TV episodes from Discovery, HGTV and MTV shooting this month. A warehouse in Green Bay has been converted into a 20,000 sq. foot sound stage, and the RDI Stages complex opens in Milwaukee this month. The incentive includes a 25% refundable credit and (for Wisconsin residents) and a 25% investment tax credit.
Posted 12 October, 2008 in WV News
WEST VIRGINIA’s 27% to 31% transferable tax credit has been hampered by a recapture provision, whereby the good-faith buyer of credits might lose their value should the state later determine that the production was not entitled to the credits. A temporary solution has been proposed so that once the production company submits and receives approval for its Agreed Upon Procedures Audit from the state, a letter will be issued removing the possibility of recapture. This should be a boon to production in WV, the only state that offers River On Demand â„¢, which tailors the flow of the Gauley River to the needs of the production. Our friends at Tax Credits LLC helped develop this proposal.
Posted 12 October, 2008 in SC News
SOUTH CAROLINA has exhausted wage rebate funds for the fiscal year ending June 30, 2009. However, ample funds for the 30% supplier rebate remain. For further details contact the commissioner, Jeff Monks: jmonks@scprt.com
Posted 12 October, 2008 in MO News
MISSOURI has $4.4 million still remaining of their 35% tax credit allocation, for expenditures in the state. Out-of-state crew earns a 30% credit. A film company may only receive this credit for one film per year. There is no per picture maximum, provided that funds remain.
Posted 12 October, 2008 in MI News
MICHIGAN sends a reminder that productions must wrap, complete their third-party audit and receive a post-production certificate from the state prior to December 31, 2008 for the rebate to be received in 2009 (after filing the Michigan Business Tax return.) Otherwise, the rebate will not be due until 2010. There is currently no legislation in progress to put a yearly cap on the rebates.
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