Sunday night, millions of movie fans across the globe tuned in as the Academy of Motion Picture Arts & Sciences presented the 86th Academy Awards. Viewers were amazed that Adruitha Lee and Robin Mathews had spun a $250 budget into a Best Makeup award for Dallas Buyers Club. They held their breath and wondered how much Kim Novak had to drink before she stumbled her way through the animation awards. And they thrilled as first-timer Lupitsa Nyong'o won Best Supporting Actress for 12 Years a Slave. But there's one award we didn't see — and it's a key to getting any movie made. We're talking, of course, about the coveted award for Best Original Tax Planning.
When we think of movies, we immediately think of Hollywood. But most movies aren't actually made in Hollywood, or even California, anymore. 37 states offer special tax incentives to lure film development and jobs. This year, all nine Best Picture nominees benefited from various tax incentives in their filming locations. So let's take a look at some of the nominees:
- Here's a surprise. Nebraska, the deadpan tale of a curmudgeonly father making his way to Nebraska to claim a million-dollar sweepstakes (and settling a score or two along the way), was actually filmed in Nebraska! Sadly, while the $13 million production was eligible for funds from participating local economic development offices, the Cornhusker State itself didn't offer a single bushel of incentives.
- The Wolf of Wall Street may have gotten shut out on Sunday. But director Martin Scorsese's chronicle of debauchery takes the statuette for the biggest tax credit. New York offers a 30% tax credit on total expenditures, which means the Empire State picked up $30 million of the production's $100 million budget.
- Dallas Buyers Club and 12 Years a Slave were both filmed in Louisiana. The Bayou State offers the most generous credits of any state — 30% of expenditures plus 5% of payroll. Too bad the combined budget for both films totaled just $25.5 million!
- Philomena and Gravity were the only two Best Picture nominees filmed outside the United States — specifically, in England and in near-earth orbit. Filming in orbit lets producers escape taxes (and gravity) completely. As for England, Her Majesty's Revenue and Customs chips in a 25% credit on the first $38 million in costs and 20% on anything above that. (Okay,Gravity wasn't really filmed in orbit — it was filmed in England, too.)
The irony here, according to Manhattan Institute for Policy Research, is that "movie production incentives routinely fail to deliver on the economic promises made by their proponents . . . [D]ata from several states find movie production incentives generate less than 30 cents for every lost dollar in tax revenue."
Fortunately for you, though, you don't have to rent a tuxedo, borrow a gown, or prepare an acceptance speech to pay less tax. You just need a plan. We give you the strategies and concepts you need to impress the judges at the IRS. And we do it without voiceovers, CGI, or other special effects. So hit "reply" to this email and let us know you're ready to get started. And remember, we're here for your whole cast and crew!
Let's Talk! For a deeper conversation on our services, or to become a client, call Kenneth Hoffman at (954) 591-8290 Monday - Friday for a no cost consultation, or drop me a note.
Kenneth Hoffman of K.R. Hoffman & Co., LLC is a highly sought after tax and business counselor. As a trusted senior advisor and counselor working closely with Entrepreneurs, Professionals and Select Individuals, Mr. Hoffman provides counsel to his clients who are navigating through the complexity of today's business, tax, and accounting challenges.
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