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PRODUCTION INCENTIVES

September 10, 2013

Presented By: Nicole Ameln

Presented at:

WJCT Studios

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• Refundable Tax Credits These credits are refunds provided by the Tax Authorities once the Production Company has filed an income tax return. The refundable credit consists of excess production credits remaining after all income taxes are paid, and are received regardless of owing any income tax liability.

• Transferable Tax Credits These credits are non-refundable tax credits. If not used to offset the Production Company’s income tax liability, the Production Company is allowed to sell the tax credits directly to local taxpayers, or indirectly through brokers.

• Rebates Rebates are funds paid to the Production Company directly from the respective film office, are typically not administered by the Tax Authorities, and are not processed through income tax returns.

Types of Production Incentives

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Production Incentives Interactive U.S. Map

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• Rebates/GrantsAR, CO, DC, ID, ME, MN, MS, OK, OR, SC, TN, TX, UT, VA, WA, WY

Tax Credits

• RefundableHI, LA, MA, MD, MT, NM, NYS, NYC, NC, TN, WI

• TransferableAK, CA, CT, FL, GA, IL, LA, MA, MO, NJ, PA, RI, PR, WV

• Non-Refundable and Non-Transferable CA, KS

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Key U.S. Jurisdictions

Alabama

Type of Incentive: Refundable tax credit

Maximum Benefit: 25% of qualifying local spend and nonresident labor; 35% of resident labor

Project Criteria: Minimum spend $500,000

Qualifying Compensation:ATL – Residents & Non-ResidentsBTL – Residents & Non-Residents

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Key U.S. JurisdictionsAlabama (cont’d)

Caps: Per project cap of first $20,000,000 of Alabama spend; Annual cap of $15,000,000; increasing to $20,000,000 October 1, 2014

Sunset/Review:None

Recent Productions:Southern Crackers, pilot – Baltic TigersMom’s Night Out, feature – Signal Hill ProductionsTokarev, feature – Hannibal Pictures

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Key U.S. Jurisdictions

California

Type of Incentive: Non-refundable, non-transferable (except for “independent films” or transfers to affiliates) income tax credit (with 5-year carry forward) or sales and use tax credit (with 5-year carry forward)

Maximum Benefit: 20% of qualifying local spend in the case of qualifying features, MOWs, miniseries, and new television series for basic cable; 25% of qualifying local spend for qualifying “relocating” television series and “independent films”

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Key U.S. JurisdictionsCalifornia (cont’d)

Project Criteria: ≥75% of the production days or total production budget within the state; budget between $1,000,000 and $75,000,000 - feature films/$10,000,000 - independent film; minimum spend of $1,000,000 for new television series and $500,000 for MOW. No minimum spend for relocating TV series.

Qualifying Compensation:BTL – Residents & Non-Residents

Caps: No per project cap, $100,000,000 annual cap

Sunset/Review: June 30, 2017

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Key U.S. JurisdictionsFlorida

Type of Incentive: Transferable tax credit (one transfer to 2 transferees, 5-year carry forward)

Maximum Benefit: 30% made up of the following: 20% of qualifying spend (including digital media projects), with 5% bonus for "off season" projects and 5% bonus for "family-friendly" projects and/or filming within an underutilized region. Additional 5% on stage expenses if ≥50% principal photography filmed at a qualified facility. 15% to hire FL students.

Project Criteria: ≥ 60% of cast and BTL crew must be residents;Minimum spend: general $625,000, comm./music $100,000, ind./em. mkt $100,000.

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Key U.S. Jurisdictions

Florida (con’t)

Qualifying Compensation: maximum of $400K per personATL – ResidentsBTL – Residents

Caps:Per project cap of $8,000,000 film; $500,000 comm./music; $125,000 ind./em. Mkt.Program cap of $296,000,000 through June 30, 2016

Sunset/Review: June 30, 2016

Recent Projects:Burn Notice, Season 7 – Fox Television StudiosThe Glades, Season 4 – Fox Television Studios

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Key U.S. Jurisdictions

Georgia

Type of Incentive: Transferable tax credit (one transfer to one or more transferees, 5-year carry forward)

Maximum Benefit: 20% of the "base investment" in the state, plus 10% if the production includes a "qualified Georgia promotion”

Project Criteria: Minimum local spend = $500,000

Qualifying Compensation:ATL – Residents & Non-ResidentsBTL – Residents & Non-Residents

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Key U.S. JurisdictionsGeorgia (cont’d)

Qualifying Compensation:ATL – Residents & Non-ResidentsBTL – Residents & Non-Residents

Caps: None

Sunset/Review: None

Recent Productions:The Hunger Games: Mockingjay, feature – LionsgateSpongebob Square Pants, feature – ParamountThe Internship, feature - Fox

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Key U.S. Jurisdictions

Hawaii

Type of Incentive: Refundable tax credit

Maximum Benefit: 20% of qualified costs on Oahu or 25% on the other islands

Project Criteria: Minimum local spend is $200,000;Make reasonable efforts to hire local talent and crew;Provide evidence of contributions (financial or otherwise) towards the furtherance of local film, TV and digital media industries

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Key U.S. JurisdictionsHawaii (cont’d)

Qualifying Compensation:ATL – Residents & Non-ResidentsBTL – Residents & Non-Residents

Caps: Per project cap of $15,000,000;No annual cap

Sunset/Review: December 31, 2018

Recent Productions:The Descendants, feature – Fox Searchlight

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Key U.S. Jurisdictions

Louisiana

Type of Incentive: Fully transferable and partially refundable tax credits; can be transferred to the state of Louisiana for 85% of face value

Maximum Benefit: 30% of qualifying local spend, including the payroll for residents and nonresidents, plus 5% of resident payroll up to the first $1,000,000 for each resident

Project Criteria:Minimum local spend > $300,000

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Key U.S. JurisdictionsLouisiana (cont’d)

Qualifying Compensation:ATL – Residents & Non-ResidentsBTL – Residents & Non-Residents

Caps: None

Sunset/Review: None

Recent Productions:American Horror Story 3, series – FoxWhen the Game Stands Tall, feature – MandalayBonnie and Clyde, mini series - SonyFantastic Four 2, feature - Fox

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Key U.S. JurisdictionsMichigan

Type of Incentive: Cash Rebate

Maximum Benefit: 27% of local spend32% of resident labor20% of nonresident BTL27% of nonresident ATL

ANDAn additional 3% on local spend and resident labor if incurred at a qualified facility or post-production facility

Project Criteria: Minimum local spend of $100,000;Film Office has discretion to approve a project based on a number of factors.

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Key U.S. JurisdictionsMichigan (cont’d)

Qualifying Compensation:ATL – Residents & Non-ResidentsBTL – Residents & Non-Residents

Caps: No per project cap; Labor is capped at the first $2,000,000 of each person$50,000,000 annual cap

Sunset/Review:September 30, 2017

Recent Productions:Batman, feature – Warner Bros.

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Key U.S. Jurisdictions

Mississippi

Type of Incentive: Cash Rebate

Maximum Benefit: 25% of local spend and nonresident labor; 30% of resident labor; plus an additional 5% for veterans

Project Criteria: Minimum spend of $50,000

Qualifying Compensation:ATL – Residents & Non-ResidentsBTL – Residents & Non-Residents

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Key U.S. Jurisdictions

Mississippi (cont’d)

Caps: Per project cap of $10,000,000; Labor is capped at the first $5,000,000 of each person$20,000,000 annual cap

Sunset/Review:June 30, 2016 on rebate for nonresident only

Recent Productions:Batman, feature – Warner Bros.The Help, feature – DreamworksWalk the Line, feature - Fox

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Key U.S. Jurisdictions

New Mexico

Type of Incentive: Refundable tax credit

Maximum Benefit: 25% of qualifying local spend; an additional 5% bonus for qualified television series; an additional 5% bonus on resident crew labor expenses and fringe benefits, excluding performing artist compensation, if shooting requirements in a qualified production facility in New Mexico are met

Project Criteria: No minimum spend;

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Key U.S. JurisdictionsNew Mexico (cont’d)

Qualifying Compensation:ATL – Residents & Non-Residents (Talent & Stunt ONLY)BTL – ResidentsBTL – Non-Residents (Special “Employee” Rules)

Caps: No per project cap;Resident & nonresident Talent and Stunt are capped at $20,000,000 in the aggregate;$50,000,000 annual cap

Sunset/Review:None

Recent Productions:Lone Ranger, feature – DisneyBreaking Bad, series - Sony

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Key U.S. JurisdictionsNew York

Type of Incentive: Refundable tax credit

Maximum Benefit: 30% of qualifying production local spend (facility, location, and post-production costs) or 30–35% of stand-alone qualifying post-production spend; Beginning Jan 2015 an additional 10% for services performed in certain counties outside NYC area

Project Criteria: With the exception of an independent film or pilot, at least 10% of total principal photography must occur on a stage and for location costs to qualify, at least 75% filmed in NYS or $3,000,000 spent on stage costs

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Key U.S. Jurisdictions

New York (cont’d)

Qualifying Compensation:No ATLBTL – Residents & Non-Residents

Caps: $420,000,000 annual cap

Sunset/Review: December 31, 2019

Recent Productions:The Tonight Show, series – NBCSpider Man 2, feature - Sony

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Key Jurisdictions

Puerto Rico

Type of Incentive: Transferable film tax credit (unlimited carry forward and transferees)

Maximum Benefit: 40% of qualifying local spend and resident labor; 20% on payments to nonresidents

Project Criteria:Minimum local spend ≥ $100,000; ≥ 50% of principal photography must be local for development expenses to qualify

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Key JurisdictionsPuerto Rico (cont’d)

Caps:No per project caps; $50,000,000 annual cap can be increased by the Government when expenses incurred in a Film Development Zone

Sunset/Review:June 30, 2018

Recent Productions:Pirates of the Caribbean, feature – DisneyFast Five, feature – UniversalTeen Beach Movie , MOW - Disney

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Production Incentives Caribbean

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Key JurisdictionsDominican Republic

Type of Incentive: Transferable tax credit (additional incentives for local content and related investments)

Maximum Benefit: 25% of qualifying local spend

Project Criteria:Minimum local spend ≥ US$500,000; bundling of projects by single owner permitted; foreign productions require a minimum participation of resident labor: 10% (first three years), 20% (next two years) and 25% (in the sixth year of enactment); the Directorate General of Film (DGCINE) can reduce the requirement if DO residents/nationals unavailable

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Key JurisdictionsDominican Republic (cont’d)

Caps:None

Sunset/Review:None

Recent Productions:Fast and Furious, feature - Universal