Film incentives – by which we mean any production incentives, whether for TV, film, web series, commercial, animation – have a lot of specific terminology. Get definitions of common film tax incentive terms below.
Certified Film Tax Credit
A tax credit that has been approved by the state for transfer or sale to investors. Often requires a local CPA audit.
When a production company gets a transferable film tax credit from a state, but the prodco has no state tax liability (because they’re headquartered elsewhere), they will sell the credit through a broker on the open market. But the market doesn’t yield 100% of the value, because then the buyer wouldn’t stand to gain anything. The difference between 100% and the current market value is known as the discount. (E.g., if the current market is 89% for transferable credits in a state, the discount would be 11%.)
Quasi-governmental, non-profit, public organizations that attract motion media production crews (for movies, TV, commercials, web series, etc.) to shoot on location in their respective localities, and offer support so that productions can accomplish their work smoothly.
A direct payment to a production company by the government of a particular locale, for a specific project. Unlike tax credits, film grants require no tax liability, so they are easy to use for productions coming from outside the state to shoot on a temporary basis.
Loan Out Company (or just Loan Out)
A personal service company that provides or “loans” the services of an actor or key crew person, usually set up by the actor or crew member. This is often done for tax purposes by highly compensated employees in various industries, including entertainment. There are special considerations about loan outs for film tax credit qualification in some states.
Amount that must be spent in the locality by the production in order to qualify for the film incentive. These can vary greatly from state to state.
A check issued to the production company by the state, city or local government. Grants are a kind of rebate, but not all rebates are grants.
Applies only to tax credits. If a film credit is refundable, it means the production does not need to have actual state tax liability for the “credit” to be issued. When a tax credit is refundable, it acts more like a rebate, although a state tax return must be filed before the refund is issued.
For states with transferable film tax credits, resident buyers are local taxpayers who purchase the tax credits from producers and brokers to use against their own state tax liability.
A transferable film tax credit can be sold or brokered to another company that has tax liability in the given state. Can be used by out-of-town production companies that have no tax liability, and thus no use for the tax credit. If a credit is transferred, it is usually sold at a discount to a resident buyer.
Need more? Try our Production Incentives section.