Georgia offers entertainment tax credits to incentivize film, television, music video, and video game production in the state, which has significantly increased qualified investments from $262 million in 2007 to an estimated $770 million in 2009. These tax credits can be purchased by Georgia taxpayers at a discounted rate, providing an immediate dollar-for-dollar reduction in their state income tax liability and yielding an estimated 11.1% return. While there is a risk of credit recapture on audit, producers are required to confirm qualified expenses and the state has realized economic benefits from job creation and tourism that outweigh the costs of the program.

1. Georgia Entertainment TaxGeorgia Entertainment Tax
CreditsCredits
Are they right for you and your
clients?

2. U.S. Entertainment Tax CreditsU.S. Entertainment Tax Credits
• Introduced in U.S. by Louisiana and
New Mexico in 2002
• Designed to Compete with International Production
Incentives and Currency
Exchange Variables
• The Original State Supported Economic Stimulus
Packages
• Stems Runaway Production and Creates Jobs

3. Georgia Entertainment IndustryGeorgia Entertainment Industry
Investment ActInvestment Act
 Originally Created and Passed by the Georgia
General Assembly in 2005 with a Multi-Tiered
Incentive Structure Totaling 17%
 Reorganized and Simplified in 2008, then Passed by
the Georgia General Assembly with a More
Competitive 20% Base Benefit and 30% Maximum
Benefit

4. Georgia Entertainment IndustryGeorgia Entertainment Industry
Investment ActInvestment Act
The Act Incentivizes Four Major
Entertainment Segments:
1) Film & TV Projects
2) Commercials
3) Music Videos
4) Interactive Gaming

5. Georgia Entertainment Industry ActGeorgia Entertainment Industry Act
Results: Gross Qualified Investments*
2007 = $262.1M
2008 = $294.7M
2009 = $770.2M
2010 = Estimated to Exceed 2009
* Figures Provided by Georgia Film, Music &
Digital Entertainment Office, a Division of the
Georgia Department of Economic Development

6. Georgia Entertainment Industry ActGeorgia Entertainment Industry Act
2009 GA Production Snapshot:
Film & TV Production $716.7M
Commercial Production $23.8M
Music Video Production $1.6M
Video Game Development $28M
Total Qualified Investment $770.2M
Total Economic Impact $1.37B

7. Georgia Entertainment Industry ActGeorgia Entertainment Industry Act
2009 GA Projects Included:
14 Major Studio Feature Films
12 Independent Feature Films
36 TV Movies or Series
251 TV Commercials
28 Music Videos
7 Major Video Game Projects

8. Why should a Georgia taxpayer considerWhy should a Georgia taxpayer consider
buying Entertainment Tax Credits?buying Entertainment Tax Credits?
 Tax credits are a smart way to reduce tax liability by
purchasing at a discounted rate.
• Purchasers get a direct dollar-for-dollar offset against
Georgia income taxes which can be carried forward five
years to be applied against future Georgia income taxes.
• The available credits may be purchased by single
or multiple buyers.

9. Why should a Georgia taxpayer considerWhy should a Georgia taxpayer consider
buying Entertainment Tax Credits?buying Entertainment Tax Credits?
Other Tax Credits:
 Low Income Housing Tax Credits (LIHTC)
 Environmental Tax Credits
 Energy Tax Credits
 Education Tax Credits

10. Why should a Georgia taxpayer considerWhy should a Georgia taxpayer consider
buying Entertainment Tax Credits?buying Entertainment Tax Credits?
LIHTC:
 Complex
 15-year Recapture Window
 Must be Partner
 Best for AMT Filers

11. Why should a Georgia taxpayer considerWhy should a Georgia taxpayer consider
buying Entertainment Tax Credits?buying Entertainment Tax Credits?
Tax Credits Sold at Discount from Face Amount
Example (Assumes 10% discount):
• Taxpayer has $5M in Georgia Income Tax Liability
• Same Taxpayer Would Pay only $4.5M to Offset $5M
Georgia Income Tax Liability
• Tax Savings = $500,000 = 11.1% Immediate Return on
the Taxpayers’ $500,000 Investment in the Tax Credits
• If Tax Credits are Purchased 60 Days Before Needed,
Buyer Gains 66.6% Annualized ROI

12. Entertainment Tax Credit UpsideEntertainment Tax Credit Upside
 The taxpayer does not buy any interest in the
production itself and, therefore, is not affected
by the outcome of the production or liabilities
created by the production.
 These credits are simple and easy to apply with
predictable delivery dates.

13. Entertainment Tax Credit DownsideEntertainment Tax Credit Downside
• One-Time, Simultaneous Transfer of All Tax
Credits From the Producer
• There is a possibility of “recapture” if the
Georgia DOR disallows any of the claimed
expenses upon audit.
• 3-Year Recapture Window (15-Year LIHTC
Recapture Window)

14. Protection Against RecaptureProtection Against Recapture
• Taxpayer Needs Indemnification/Guaranty to
Pay Any Assessed Taxes Related to the Credits
• Credit Status of the Guarantor is Critical
• Price of Tax Credits Will Vary Depending on
Credit Worthiness of Guarantor

15. Protection Against RecaptureProtection Against Recapture
 Georgia CPA Firm Performs “Agreed Upon
Procedure” to Confirm Producer’s Proper Amount of
Credits
• To Date, No DOR Audits Have Resulted in Recapture
• Recapture Rules are Much Less Complicated Than
Other Tax Credits

16. Does Georgia Benefit fromDoes Georgia Benefit from
Entertainment Tax Credits?Entertainment Tax Credits?
Yes. The 20% base credit result in an economic breakeven point for the
state taking into account the items below, based on a Georgia State
University Department of Economics evaluation.
This includes affects of:
Direct Spending
 Indirect pending
 Induced Spending
 Job Creation & Long-Term
Infrastructure Growth

17. Does Georgia Benefit fromDoes Georgia Benefit from
Entertainment Tax Credits?Entertainment Tax Credits?
The additional 10% benefit is exchanged for in-kind Georgia
branding that is distributed nationally and internationally
with every Georgia-produced film, television program, music
video and gaming product, which results in a profit for the
state.
This includes:
 1-to-1 ROI in Year One
 5-to-1 Regular Long-Term (5-Year) ROI
 25-to-1 Legacy (20+ Years) ROI
 Increased Tourism & Trade

18. Denise Evans-Elsbree
Principal Partner
www.gfcc.us
Denise@gfcc.us
678-409-8394

19. Georgia Entertainment Tax CreditsGeorgia Entertainment Tax Credits
Good for Georgia
 The Credits Spur Economic Growth
Good for Georgia Tax Credit Purchasers
 The Credits Decrease the Actual Amount Paid for
State Income Tax Liability, with an Immediate Return
on the Taxpayer’s Investment in the Tax Credits