Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Tax Developments for Film Companies
For the last several years, the largest source of “soft money” for film financing has been U.S. state tax credits, but within the past year the Internal Revenue Service issued a Chief Counsel Advice that threatened the viability of this vital source of financing by holding that the receipt of the proceeds from the sale of state tax credits is immediately taxable. IRS Chief Counsel Advice 201147024 (2011) (http://1.usa.gov/OjyqGy).
Up until now, film companies have been treating the proceeds of the sale of state tax credits as reducing the cost of the film. While there is no direct authority for this treatment, it seems reasonable by analogy to the treatment of price rebates, which are not treated as taxable income but instead are treated as a retroactive reduction in the cost of the purchased item. See, Rev. Rul. 76-96, 1976-1 CB 23; Rev. Rul. 78-194, 1978-1 CB 24; Rev. Rul. 85-30, 1985-1 CB 20; Rev. Rul. 88-95, 1988-2 CB 28; Freedom Newspapers Inc. v. Comm'r, 36 TCM 1755 (1977). The net result of this treatment has been that if a film costs $15 million before tax credits and the tax credits are sold for $3 million, the film company treats the film as costing $12 million. This $12 million net cost is then amortized using the income forecast method, commencing in the tax year that the film is released to the public.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.
CLE Shouldn't Be the Only Mandatory Training for Attorneys
Each stage of an attorney's career offers opportunities for a curriculum that addresses both the individual's and the firm's need to drive success.
Discovery of Claim Construction and Infringement Analysis May be Compelled Prior to a Markman Hearing
A defendant in a patent infringement suit may, during discovery and prior to a <i>Markman</i> hearing, compel the plaintiff to produce claim charts, claim constructions, and element-by-element infringement analyses.