What 181 Means for Inventors
"K" Tax rebates and incentives for money spent on film or television production within a particular state can be combined with the benefits of Section 181 allowing an investor (working with cooperative film producers) to greatly minimize his or her risk on what would ordinarily be considered a risky investment. For example, if a tax payer is in the thirty-five percent (35%) tax bracket and a qualifying film is shot in Louisiana which has a state tax credit up to forty percent (40%), an investor has greatly reduced their risk. They would get the deduction of their federal taxes equal to their investment PLUS most states with incentives monetize the credits BEFORE production for up to 90% of the credit amount. Continuing this example, if a film is shot in Louisiana with a budget of $1,000,000, the state would provide the production entity up to 40% of the entire budget in transferrable state tax credits. If the investor was not a resident of Louisiana, the state would monetize 90% of the credit to the production company before filming commenced. That would provide the investors a return of $360,000 ($1,000,000 x .40 x .90) before filming even began.
There are currently 38 states in the United States that have some type of tax credit or rebate plan.