How your investment is assured a return of 50-100%

If you are an individual Investor, Private Equity Firm, Hedge Fund, HNW Investor, Asset Manager, Fund Of Fund, Or Regional Company and are looking for a high-yield, absolute-return alternative investment that also can generate substantial Federal and State Tax Incentives, Credits, Cash Rebates, while at the same time be part of a structured film finance opportunity that can offer an absolute return of 50-100% on capital before revenues, offer long-term multiple exit strategies, and liquidity options, then continue reading...

Minimizing Investor Risk Through United States Film Subsidies
The American Jobs Creation Act Of 2004 and the 2004 enactment of Section 181, marked an unprecedented change in U.S. policy toward the phenomenon known as "Runaway Production" for the film industry. Hollywood, like many American industries, had grown tired of the high cost of labor and taxes in the United States. Canada and other countries identified the potential financial benefit and took advantage by successfully luring American film and television production onto their soil, taking outrageous amounts of production dollars with them. The government’s reaction was to include Section 181 within the American Jobs Creation Act of 2004. Section 181 offers tax incentives for investors in independent film and television productions produced within the United States.

Under Section 181 an investor may deduct the money which is invested in a film or television production from his or her passive income earned in the same year. If the investor is actively involved in the operation of the production, he or she may deduct the amount of investment from all active income earned in the same year. Productions with budgets below $15,000,000 (up to $20,000,000) which have at least seventy-five percent 75% of its production completed within the United States qualify under Section 181. Investors can be either individuals or businesses.

PRODUCER'S STATEMENT:
“Investing in our motion picture projects includes a level of safety investors haven’t experienced before in the entertainment industry. We’ve taken the time to research recent tax legislation, and we’ve hired a consultant who can explain how your investment is 100% tax deductable. We’ve gone through the steps to make sure the IRS will recognize your deduction. Therefore, you’re risking approximately 50-60 cents on the dollar. How many investments in this market and in this economy, can promise that a significant portion of your money is completely protected? After reviewing the tax deduction information on this website, we will be happy to share with you how we’re going to make an exceptionally good movie with attractive profit potential"

NOTE FOR INVESTORS:
The first thing you as an investor want to know is how an entrepreneur will protect your money. Once that issue is addressed then you want to hear about profits and exits. Investors invest for a variety of reasons, but a unifying concept for all investors is simple. Many Investors are fearful of losing their money.
This fear often overrides the desire for profits. The fear of losing money is a stronger motivator than the desire for profits.
Most entrepreneurs assume an investor wants to hear about a massive ROI (return on investment). They start talking about exit strategy (the method in which investors extract their capital from a successful venture). This is putting the cart before the horse.

Tax rebates and incentives for money spent on film or television production within a particular state combined with the benefits of Section 181 allow an investor (working with cooperative film producers), to greatly minimize his or her risk on what would ordinarily be a somewhat risky investment. For example, if a tax payer is in the thirty-five percent (35%) tax bracket and a qualifying film is shot in Michigan which has a tax credit up to forty percent (40%), an investor will be eligible to recapture seventy five percent (75%) of their investment in a qualifying production. This recapture is realized before the film is even released and/or makes its first dollar. In today’s economy this type of investment assurance is hard to come by.

SECTION 181:
You’ve heard of farming subsidies. A few years back savvy film lobbyists created subsidies for the film industry. As they outlined the dangers of runaway film production to Canada, Eastern Europe and Australia, Congress passed legislation that resulted in Section 181 of the IRS Tax Code.
Put simply, Section 181 states that investment in a motion picture shot in the US is 100% tax deductable for the investor in the same year invested.

Now, Section 181 should have been easy to understand. It hasn’t been and that’s why few people understand it and even fewer use it.
In 2007 the IRS finally released a regulation interpreting the tax code.

Here are some Investor broad strokes for the Section 181 Tax Deduction:
-100% of the motion picture costs are deductible in the same year of investment.
- 75% of the motion picture must be shot in the US to qualify for Section 181.
- There is a 15 to 20 million dollar budget cap.
- There is no minimum film production budget cost.
- TV pilots, TV episodes (up to 44), short films, music videos and feature films all qualify for Section 181.
- Section 181 can be applied to active income or passive income.
- Investors can be either individuals or businesses.
- Section 181 is retroactive.
- There is no expectation for film distribution or film completion.
- Section 181 for 2010 is currently awaiting approval from Congress and Senate for a 2010-2011 extension.
- The motion picture’s corporation issues Schedule K-1’s to the investors so they can take advantage of Section 181.

GOVERNMENT SPONSORSHIP: State Film Incentives passed onto Investor
In addition to the Section 181 tax deduction, the motion pictures we produce will be filmed in a state with rebates or transferrable tax credits. The Producers will then pass this subsidy onto our investors at the completion of production. As an example, if a $1,000,00.00 movie shoots in New Mexico and spends every penny in the state (or, through a pass through corporation that pays state taxes) the state of New Mexico will issue a 25% tax rebate, worth approximately $250,000.00, that can be sold for a little less than face value. That check is then passed onto to the investor(s). This is a considerable risk minimization for the Investor. With state film incentives alone, the investor is only risking 75 cents (average) on the dollar, if the project is produced in New Mexico…or 62 cents on the dollar if produced in Michigan. Iowa now has a 50% rebate. In essence, you are making an investment in our movie for only 75 cents on the dollar, and the government is picking up the rest of the tab, on a delayed time table. There are currently 38 states in the United States that have some type of tax credit or rebate plan. Here is a current List of State Film Incentives with updated information provided by Entertainment Partners.

MARRIAGE of Gov't Sponsorship and Section 181:
Combine Section 181 with a state film tax rebate. By coupling the two together you can reduce an investor’s risk by 50-100%. Think about that. It does depend on how much the investor earns annually, how much they’ve invested in the movie and where your movie will be produced…but, it is possible that an investor could invest in our motion picture…and risk nothing. Conservatively, the risk will be 50% of your investment. That means for investing $100,000.00 you are guaranteed to recoup $50,000.00 in tax deductions and rebates. Depending on the math and the possible film pre-sales to foreign territories (based on the talent) Investors could recoup 100% of their investment before the film is distributed.

Here is an example. Our movie needs 2,000,000. Investor X wants to invest 1,000,000 into our film. Their annual income is 5,000,000 and they have 10M in assets . Their annual taxes are approximately 1.75 M (35% tax bracket) and they have absolutely no tax write-offs to take advantage of. If they invest $1,000,000 they’ll be risking $650,000.00 investment in the motion picture, and will have saved themselves approximately $350,000 in federal income taxes. So, that means the investor is risking 65 cents on the dollar. But, wait! The movie is going to shoot in the state of Michigan. Michigan will give you a 40% rebate. They’ll kick in an extra 2% if you shoot it in one of the numerous Special Economic Zones they have throughout the state. So, you shoot in Detroit and spend over $1,000,000 in Michigan. That means they’ll grant you a 42% tax rebate on your gross spend in Michigan, minus tax rebate broker fees. That’s around $350,000. This rebate belongs to our investor. Investor X will now be getting approximately $700,000 in tax deductions and rebates from the Federal Government and the State of Michigan for their $1,000,000 investment in our motion picture. They’re actual risk is less than 30 cents on the dollar. And the upside is, the investor will receive revenue from distribution sales and licenses of the motion picture. Additionally, 9% of the future gross revenues are non-taxable under Section 199.

INVEST BEFORE SECTION 181 EXPIRES:
In order to optimize this opportunity and be successful, interested investors should contact the film producers as soon as possible with their introductions.
In order to comply with Section 181, an investor will need to complete the required IRS filings along with their normal tax forms.
A qualified accountant and/or attorney are always a good idea when utilizing the benefits of Section 181.

We still have to make a great film
No matter how much we spend on a film, it must be great. The script must be amazing. The acting must be astounding.
You still need a celebrity actor to convince traditional distributors to consider releasing the movie. And the list goes on.
We are happy to take conference with serious and curious investors and work with you to maximize your investment dollars and help us produce a commercially viable motion picture that will profit in the marketplace.

We will continue to monitor the Act and issue additional updates as they become available. For any questions related to Section 181 or private equity placements for film or television production please contact Joseph Barmettler jj@newintegrityfilms.com or call from our contact page.