La. Admin. Code tit. 61 § I-6541

Current through Register Vol. 50, No. 8, August 20, 2024

Section I-6541 - Illustrative Examples of Production Expenses

A. Eligible. Eligible production expenditures shall include, but not be limited to, studio rental, musician/ performance fees, travel and airfare if booked through a Louisiana travel agent, producer fees within limitation, legal fees within limitation, music copying fees, orchestration fees, music publishing/clearance fees, and fees for mixing and mastering only on recordings originally made in Louisiana.

B. Ineligible. Ineligible costs include, but are not limited to, CD duplication, costs for marketing and distribution and any costs associated with filming/video.

C. Limitations for Certain Transactions

1. Related Party Transactions. LED may request and use additional information in determining the extent to which expenditures for related party transactions will be certified, by requesting and obtaining documentation including, but not limited to, third-party contracts, notarized affidavits, tax records, W2s, 1099s and cancelled checks. Related party transactions may be referred to the Office of the Inspector General for further review.

2. Producer fees may be subject to limitation as follows.

a. Applicants must provide detailed accounting and verification of expenditures relating to "all-in producer deals." For example, audits must reflect payments made to all vendors, and Producer Agreements should reflect the scope of services to be provided in Louisiana and include a clause allowing the State to audit the Producer's accounting records directly related to any expenses claimed for tax credits.

b. LED establishes a benchmark of up to 20 percent of total qualifying Louisiana production expenditures for Producers Fees (for the calculation, Louisiana production expenditures exclude any producer fees), which shall be considered fair market value. While applicants may enter into producer agreements with fees in excess of LED's approved benchmark, producer fee payments exceeding 20 percent may not be eligible to earn tax credits.

c. LED establishes a benchmark of up to 12 percent of total qualifying Louisiana production expenditures (for the calculation, Louisiana production expenditures exclude any producer fees), for related-party producer fee expenditures, which must be supported by a cost report or audit, when applicable, and documentation of services provided. Fair market value for related-party services rendered must also be established by submission of third-party contracts for similarly-sized projects and scope of work or other documents as approved by LED. While productions may enter into agreements with fees in excess of LED's approved benchmark, payments exceeding 12 percent will not be eligible to earn tax credits unless the benchmark is exceeded through expenditures (supported by a cost report or audit, when applicable, and documentation of services provided) under third-party contracts only with no related-party expenditures.

3. Legal fees shall be limited to no more than 10 percent of base investment.

La. Admin. Code tit. 61, § I-6541

Promulgated by the Department of Economic Development, Office of Business Development, Office of Entertainment Industry Development, LR 42:38 (January 2016), repromulgated by the Department of Economic Development, Office of Business Development, LR 45885 (7/1/2019), Amended by the Department of Economic Development, Office of Entertainment Industry Development, LR 461083 (8/1/2020).

AUTHORITY NOTE: Promulgated in accordance with R.S. 47:6023.