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Why Purchase a Film Tax Credit?

IAN M. FISHERBy Ian M. Fisher, Esq., LLM

Perhaps you’ve seen movie cameras, crews, and even movie stars around town.  Maybe you’ve wondered why so many studios would choose Georgia to film.  It all comes down to one of life’s certainties: taxes.

Georgia began offering a tax credit for film studios in 2005 to bring jobs and expenditures into the state.  Companies producing feature films, television series, music videos and commercials, as well as interactive games and animation can receive up to a 30% credit against Georgia income depending on their film activities in the state.  Now how does that affect you?  The Georgia legislature made the credits transferable.  Anyone can purchase them.

There is a State Tax Credit Exchange that has been set up specifically for film companies who wish to sell their credits to willing buyers.  Many of the film companies do not have much Georgia income tax liability, so they sell the credits at a discount to those who can use them.  The discounts vary depending on supply and demand, but generally sell at a rate between 8% and 15%.

For example, if your Georgia income tax liability is $10,000 you may be able to purchase a film tax credit for $8,500-$9,200, which would offset your entire liability while costing you less.  There is low risk in this transaction as the Georgia legislature specifically authorized it.  Even if your state income tax liability is not that high, you can carry the credit forward for up to five years.

If you are interested in using Georgia Entertainment Tax Credits, give Hoffman & Associates a call at 404-255-7400 or send us an email at info@hoffmanestatelaw.com.