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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.
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.
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.
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.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
Second Circuit Reinforces Bankruptcy Code Settlement Payment Safe Harbor
The Second Circuit affirmed the lower courts' judgment that a "transfer made … in connection with a securities contract … by a qualifying financial institution" was entitled "to the protection of ... §546 (e)'s safe harbor ...."