Frequently Asked Questions related to the Motion Picture Investor Tax Credit.
Q. What is the minimum threshold to qualify?
A. $300,000 in Louisiana expenditures.
Q. What qualifies for the 30% credit?
A. Only expenditures made for tangible goods and services directly related to the state-certified production within the borders of the State of Louisiana. That includes production payroll for residents and non-residents alike, as long as it is for work performed in Louisiana.
Q. What qualifies for the additional 5% credit?
A. To the extent that base investment is expended on payroll for Louisiana residents employed in connection with a state-certified production, each investor shall be allowed an additional tax credit of 5% for Louisiana resident payroll. The additional 5% credit is only allowed on the first $1 million of a resident's payroll. Any amount above that shall be eligible for the 30% credit only.
Q. How do I know if something is a Louisiana spend?
A. Services will qualify if performed in Louisiana. Goods will qualify if purchased through a source in Louisiana.
Q. What is a source within the state?
A. A source is a physical nexus with at least one full-time employee and posted business hours.
Q. Are goods obtained through a production service company or a reseller eligible?
A. Yes. However, the production must make an effort to find the tangible good in Louisiana. The efforts must be documented, and anything obtained through this method may be disallowed if the good is readily available in Louisiana.
Q. I'm a Louisiana taxpayer and I earned these tax credits. Can I use the tax credit to offset my personal income tax liabilities?
Q. I'm a Louisiana corporation and subject to corporate income taxes. Can I use the tax credit to offset my corporate income tax liabilities?
Q. I've earned this tax credit and have no Louisiana income tax liabilities. Can I transfer the credit?
A. Yes. The credits are fully transferable.
Q. I've earned this tax credit and I cannot find anyone to transfer this credit to in Louisiana. What do I do?
A. You can opt to transfer the credit to Louisiana Entertainment. The state will then issue you a check for 85% of the face value of the credits. In other words, for $1 worth of credits, the State will issue you a check for $0.85.
Q. Must a certain percentage of crew be Louisiana residents?
A. No. However, Louisiana has a skilled and deep crew base and expenditures made on hiring Louisiana residents increases the potential tax credits that can be earned.
Q. Are fuel purchases eligible for tax credits?
A. Yes. However, any taxes charged by the State or any local governing entity in Louisiana are ineligible and must be removed from qualifying expenditures. These amounts are subject to verification by the CPA.
Q. Do fringes qualify?
Q. Do you accept loan outs?
Q. Are bond fees eligible?
A. Yes, as long as the bond is purchased from a Louisiana company and all of the services relating to the issuance of the bond are performed in Louisiana.
Q. Are per diems eligible?
Q. Are finance fees eligible?
A. Yes, as long as the finance fees are not associated with a related-party transaction. In addition, the financing must be obtained from a source within the state and any services provided must be performed in the state.
Q. How is a Louisiana resident defined?
A. Any person domiciled in the state of Louisiana and any other person who maintains a permanent place of abode within the state and spends in the aggregate more than six months of each year within the state is considered a Louisiana resident. The resident must sign a declaration of residency and provide supporting documentation for the production.
Q. How long do I have to start production once I receive Initial Certification?
A. 365 days.
Q. My spending in Louisiana started before receiving Initial Certification. Can some of these expenditures still be claimed?
A. Yes. Expenditures may be eligible for one year prior to and one year after initial certification.
Q. What is the going rate for tax credits on the open market?
A. Tax credits usually sell between 80 and 90 cents on the dollar on the open market. Also, you can transfer the credits to the State for 85 cents on the dollar.
Q. What if I have not secured distribution yet?
A. We only require that there be a commercial multi-market distribution plan, not a distribution agreement in place.
Q. What if I take a Louisiana crew to another state?
A. That is certainly permissible; however, credits can only be issued for the work performed directly in Louisiana.