Film Investment Group

How successful can an independent film become? Can you name any I might have heard of? You might just be surprised what independent filmmakers have made. 10. 'CROUCHING TIGER, HIDDEN DRAGON'...Continue reading

10 Days left in 2016 to avoid paying the IRS this year

So how do movies make money? 1. Domestic The release of the film in America and Canada, also known as North America. 2. International The release of the film in the rest of the world combined. In some cases, studios will only have the rights to release a movie domestically, with another company picking up the international rights (or vice verse). For example, Paramount have the rights to distribute The Adventures of Tintin domestically while Sony controls the intern...ational rights. 3. Theatrical Relating to the cinema release (i.e. in movie theatres). 4. Home Entertainment (or Home Video or Home Ent) The release of the film on DVD, Blu-Ray, previously VHS and online streaming services. 5. Pay TV Subscription television channels. In the UK this includes Sky Cinema and in the US cable networks such as HBO. 6. Free TV Free to air television, typically either public service broadcasting or ad supported. In the UK this includes the BBC and in the US ABC. 7. Video on Demand (VOD) Online streaming services (such as iTunes, Netflix and Amazon Prime). 8. Pay Per View (PPV) An old form of VOD which is still active in some places involving the viewer paying to watch an encrypted, scheduled transmission of the movie.1.

Another great question about the opportunity to be a part of a film as an investor. "Can you please explain how a typical investment in a film is structured?" It often depends on who is doing the project, many factors determine what is offered to investors, in order to answer your question let's assume it's for a $4 million independent film to be shot in Georgia.... (The IRS section 181 financial incentives are not included here) The Producers will need to raise $4,000,000 to fund production. They have set a share value of $20,000, so there will be 200 shares (investors may own more than one share). The Producers will eventually also have an equal number of shares (200) to be split among the company, actors and crew. The film is produced and $4,000,000 has been spent, this qualifies for a 30% State of Georgia Film Tax Credit or $1,200,000, after brokers sell the credits, approximately $1,092,000 is raised. This is split among the investors 100%, each share receives $5,460. Each investor is now at 27% recoupment. (Those using Section 181 are now at a 27% ROI). Films earn revenue from many sources, Theaters, Pay Per View, Premium Channels, Broadcast TV, Cruise ships, Airlines, DVD, and of course 65% of all movie revenue is now from International markets. If the LLC has been set up to pay all revenue to the investors first (100% recoupment), the first $2,908,000 of revenue goes to the investors, that's $14,540 per share. At this point, each investor has now received 100% of their original investment back. (Those using IRS Section 181 have reached a 100% ROI) After 100% recoupment, the Founder's shares become active in the distribution of revenue. Most agreements last between four and seven years, obviously the vast majority of all revenue for most films comes within the first year. Let's assume this film is moderately successful and earns $30,000,000 total or $26,000,000 after recoupment. The investors will now split an additional $13,000,000 or $65,000 per share (If they used IRS Section 181, they have avoided paying $20,000 to the IRS, earned $5,460 in Film credits, recouped $14,540 from the original investment, plus another $65,000 for a grand total of $85,000 instead of paying the IRS $20,000). The production company will also earn $13,000,000 or $65,000 per share for those who produced, acted or worked on the film. It's important to note that none of those in this category have profited from the film until after each and every investor was made 100% whole. TV series projects typically have different conditions and terms due to an extended periods of revenue generation.

Great PM a few minutes ago, What if I only pay about $15,000 a year in Federal taxes to the IRS, can I still take advantage of Section 181 and Georgia Film Incentives? Yes, most films set up an LLC with share values which are lower or can be split among several investors. No doubt you have already paid approximately $13,800 to the IRS this year through deductions, therefore you will need to have another $15,000 to make the investment before December 31st. When filing your 2...016 taxes as normal, simply indicate the investment with the appropriate form and the IRS will refund the taxes which you have already paid to them. Your $15,000 will also be subject to a portion of the 30% Georgia Film Tax credits, after tax credit broker's fees, you will receive about $4.095 back after the tax credits have been sold. Plus the production will have the investors at the head of the line for recoupment form project revenue for you to receive another $10,905. After 100" investment recoupment, your proceeds from the film will be in direct proportion to your investment and be subject to a federal flat tax of 9%.

State by State Film Incentives U.S. Tax Incentive Info FIG's star guide helps you target the best tax incentive jurisdictions for production. 5 stars makes it the best state to film....Continue reading

Georgia Film Credit Recap. 20% transferable tax credit + 10% if production includes Georgia promotional logo in credits, or other negotiated placements. $500,000 minimum spend through single or multi-projects in single year.... Compensation included for non-residents, $500,000 cap; however, PSC, loan out or 1099 contractor not subject to cap. Nonrefundable, transferable once in tranches of at least $100,000 to multiple taxpayers. Heightened scrutiny with regard to the use of pass-throughs, a GA vendor must have a physical operation and employees and must be engaged in procurement activities related to production expenditure. Travel agencies and insurance companies no longer have to be headquartered in GA, but must be Georgia businesses. No required certification process, exposing buyers to potential recapture of credits once transferred. As a consequence, the market price for credits sold by independent producers (who are generally unable to provide a strong financial indemnification to buyers) has been significantly diminished relative to the market price of tax credits offered by studios or networks. However, the state now offers a verification review at a cost of $55/hr per state auditor (no final hard cost estimate, requires deposit based on budget). The results of the review are effectively non-appealable, but does insulate purchasers of verified credits from recapture. However, the reviews currently have a 6+ month backlog. Payments to loan-outs (artistic or core production activities) subject to registration and 6% withholding payment to state. Withholding payment can be made by production company or payroll company. Post production expenditures in GA may qualify only if processing footage shot in GA. Georgia Film, Music and Digital Entertainment Office: http://www.georgia.org/EntertainmentIndustry/