Lights, Camera, Action and Tax Cut! Spotlight on California’s Film Tax Credit Program

Movie Reel

In a pivotal strategic effort to mitigate the exodus of filming to other states and countries, California lawmakers take aim to quadruple tax subsidies for location shooting to $400 million a year.

On Thursday, August 14th, Legislation was approved by the Senate Appropriations Committee with a 5-0 vote which would eliminate a controversial system in which film and television productions were awarded tax credits based upon a lottery system, regardless of the economic effect of the production. The bill, AB 1839, must still be approved by the full Senate and signed by Gov. Jerry Brown. However, legislative supporters indicate they are highly confident the measure will clear all remaining hurdles, saying there is widespread acknowledgment that California is quickly losing one of its signature homegrown industries to other states as well as other countries due to competing advantageous movie production tax incentives offered outside of California. As a reference, most states now offer lucrative movie production tax incentives for filmmaking, awarding over $1.5 billion in film-related tax credits, deductions, rebates and grants in 2013, up from $2 million just a decade ago.

It should be duly noted that feature film production in Los Angeles County has fallen by half since 1996, and the region’s share of television pilot production has fallen 73% since its peak in 2007, according to FilmL.A. Inc. Hollywood’s production community hailed the legislative update as the bill “underscores a commitment to the hardworking men and women of California’s film and television production community and to putting an end to the loss of these jobs,” said a statement from the California Alliance, a coalition of entertainment unions, vendors and studios. “There is no question this will make a difference,” said Bill Mechanic, a veteran film producer and former chief executive of Fox Filmed Entertainment. “This is good for California.”

Peter J. Scalise serves as the Federal Tax Credits & Incentives Practice Leader for Prager Metis CPAs, LLC a member of The Prager Metis International Group. Peter is a highly distinguished BIG 4 Alumni Tax Practice Leader and has approximately twenty years of progressive public accounting experience developing, managing and leading multi-million dollar tax advisory practices on both a regional and national level.

Peter is a highly acclaimed thought leader in the fields of accounting and taxation with deep subject matter expertise in connection to designing, implementing and defending sustainable methodologies for specialty tax incentives including, but not limited to, research tax incentives; orphan drug credits; therapeutic discovery credits; accounting methods and periods; energy tax incentives in connection to green building envelope efficiency and benchmarking, solar energy, bio energies, fuel cells, wind turbines, micro turbines, and geothermal systems; and comprehensive fixed asset analysis incorporating principles of construction tax planning, cost segregation analysis and the final treasury regulations governing tangible property.

Peter is a renowned keynote speaker and an extensively published author on specialty tax incentives, tax controversy matters, and legislative updates from Capitol Hill for NAREIT, AGRION, USGBC, AICPA, ASTP, NATP, ABA, AIA, and TEI. Peter serves as a member of the Tax Faculty for CPAacademy, iShade and TaxConnections University (“TCU”). Peter serves on both the Board of Directors and Board of Editors for The American Society of Tax Professionals (“ASTP”) and is the Founding President and Chairman of The Northeastern Region Tax Roundtable.

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