I have a client who is a Film Producer and want to know if anyone can help me tax effect the cost of my clients film production through eligible tax incentives.
Tax Professional Answers
Yes, there are tax incentives available to appropriately tax
effect the true cost of your client’s filmmaking production.
Movie Production Incentives (hereinafter “MPIs”) are tax benefits
offered on a state-by-state basis throughout the United States to entice in-state
film production. The structure, type, and size of the incentives vary from
state to state. Many MPIs include tax credits and exemptions (e.g., sales and
use tax exemptions, lodging exemptions, etc.) while other state incentive
packages include cash grants, fee-free locations amongst many other benefits. As a background, the development of MPIs stems from the economic benefits of filmmaking and television production throughout the United States and to curtail the departure of movie production to other countries.
It should be duly noted that there are now over 30 states that
offer MPIs with most being either transferable (e.g., transferable credits
allow production companies that generate tax credits greater than their tax liability
to sell those credits to other taxpayers, who then use them to reduce or eliminate
their own tax liability) or refundable (e.g., refundable credits are such that
the state will pay the production company the balance in excess of the qualified
Please contact me to discuss your client’s fact pattern so that I
can further assist you in preparing a value proposition for your client.