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Your Legal Corner - Client Alert Blog

California's New $100 Million Film Production Tax Credits

Written By: Melissa C. Marsh, Esq., California Attorney, June 2009 Add to Favorites
On February 20, 2009, Governor Arnold Schwarzenegger signed legislation creating tax credits for film and television productions. These tax credits will be administered by the California Film Commission, which will begin accepting applications on July 1, 2009 at 9:00 a.m.

To be considered for the first day's allocation, applications must be received at the California Film Commission's offices no earlier than 9:00 a.m. and no later than 3:00 p.m. Any application received before 9:00 a.m. on July 1, 2009 will be returned to its sender unprocessed; any application received after 3:00 p.m. on July 1st will be processed the following day. If an applicant plans to submit a Tax Credit Application for multiple projects, a separate Tax Credit Application must be submitted for each project in a separate envelope.

Only in California -- The tax credit applies to costs of production starting July 1, 2009 but the actual tax credit cannot be claimed on a tax return until 2011. Qualified taxpayers can carryover the tax credits for 5 years and transfer the tax credit to an affiliate. The tax credits, however, are not refundable.

The 20% Tax Credit for a "qualified motion picture" applies to:

  1. New television series (1/2 hour shows) licensed for original distribution on basic cable with a budget of at least $1 million (other exclusions apply);
  2. Feature Films with a production budget of at least $1 million, but less than $75 million; and
  3. Movies of the week, or a miniseries with a production budget of at least $500,000.

The 25% Tax Credit for a "qualified motion picture" applies to:

  1. A television series that filmed all of its prior season, or seasons, outside of California; OR
  2. An "independent film" produced by a company that is NOT publically traded, that does not have an investment exceeding 25% from a publically traded company, and that has a production budget of at least $1 million but less than $10 million.

A Qualified Motion Picture Must Also Meet The Following Three Additional Requirements:

  1. 75% of either the production days must occur in the State of California, or 75% of the total production budget must be spent in California;
  2. The principal photography must start within 180 days of the Tax Credit Application being approved; and
  3. Postproduction must be completed within 30 months of the Tax Credit Application being approved.

The total amount of credits available is $100 million per year for 5 years, i.e. through 2013. Of this $100 million, $10 million per year is set aside for independent films. The credit is allocated on a first-come, first-served basis. It should also be noted that not all production costs are eligible for the credit. Costs incurred before the Tax Credit Application is approved are not eligible. In addition, compensation paid to writers, directors, music composers and directors, producers, and all performers, other than background actors with no scripted lines, are not eligible for the credit.

If you think there is even the slightest possibility that you may qualify, visit the California Film Commissionís Website, or stop by their office at 7080 Hollywood Blvd., Suite 900 Hollywood, CA 90028 for more details. Here is a link to The Tax Credit Application (.PDF).

Tags: california, california film credit, california film production, California production tax credit, tax
Posted In: Business Law Bulletin  Corporate Client Bulletin  IP Bulletin 

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Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.

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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.