Frequently Asked Questions related to the Sound Recording Investor Tax Credit.
Q: How does this benefit my recording studio?
A: If you are a studio owner, you can market the tax credit as an incentive for talent to come to Louisiana or stay in Louisiana to record their album. They will get the tax credit, but you will get the business because the talent can get a 25% return on their investment.
Q: What is the monetary value of the tax credit?
A: The tax credit is 25% of the base investment and is issued as a rebate. A rebate is a direct payment to the applicant from the Louisiana Department of Revenue. It is not necessary to establish taxable liability with Louisiana Department of Revenue to receive the rebate, but an applicant must have a Louisiana Tax ID in order to receive the rebate.
Q: What is considered as base investment for the purposes of computing the tax credit?
A: Base investment is money spent in Louisiana that is directly related to the sound recording production project.
Q: What does and does not qualify for the sound recording investor tax credit?
A: The only expenses that will qualify for the tax credit are those that are directly related to the production of a sound recording. For a production, qualifying expenses include, but are not limited to: travel (if purchased through a Louisiana travel agent), studio rental and fees, producer fee, composer fee, musicians’ fees, and any other costs directly related to production. Non-qualifying expenses include, but are not limited to: distribution, marketing, promotion, advertising, expenses incurred but not paid, expenses paid to a business that is not located in the State of Louisiana, and any costs not directly related to the production.
Q: What is a distribution plan?
A: A distribution plan will illustrate how an applicant plans to distribute a sound recording once it is finished. The distribution plan needs to be as detailed as possible. Will it go on sale at stores, over the Internet, through a distribution company, etc.?
Q: What is a preliminary budget?
A: The preliminary budget should outline the anticipated sound recording production expenditures for the project.
Q: What is a complete application?
A: A complete application is one that is filled out entirely with all supporting documentation and requested information and is submitted to Louisiana Entertainment. Only complete applications will be able to proceed with the certification process.
Q: Will I need to hire a CPA?
A: YES. But only at the end of the process. In the 2009 legislative session, the program was altered to no longer require an audit but instead a cost report performed by a CPA.
Q: Is there a minimum investment?
A: The minimum investment is $15,000 in Louisiana on the project(s) for which the application is made. The investment may include more than one project to reach the $15,000 minimum, provided no single project exceeds the $15,000 threshold by itself.
Q: What is the maximum tax credit amount my project can receive?
A: While there is no per-project cap for the sound recording investor tax credit, the program is capped at $3 million per year and the tax credits are granted on a first come, first served basis.
Q: Can this incentive be used in combination with other LED incentives?
A: LED has many business incentives, some of which may be combined with the sound recording investor tax credit. Claiming identical expenditures for more than one LED incentive program is prohibited.
Q: I started spending money in Louisiana before I received an Initial Certification. Can I still claim what I have spent?
A: YES. As long as a company can claim their first expenditure on a project six months prior to the date their project is approved (initially certified) for the program.
Q: Is there an application fee?
Q: When will I know if my project qualifies?
A: As soon as we have had a chance to review and clear up any outstanding issues in the application (which we strive to complete as quickly as possible), we issue an Initial Certification that acknowledges a project’s applicable expenditures based on those proposed in the application.
Q: When do I receive my tax credit?
A: Tax credits are issued as rebates following a project’s Final Certification.