structure would offer:
1. 100% passive income deductions under the IRS Section 181 "American Jobs Creation Act" for both individuals and corporate tax payers
2. 20%-30% in State Tax Credits (depending on state)
3. Economic Development
4. Job Creation, Including For Minorities And Women
5. Leverage of an additional 50-100 million in mezzanine/senior debt if needed to finance/co-finance 5-10 movies
Yuri Rutman, President of Chicago based Noci Pictures Entertainment has just launched a new hybrid tax credit film fund for institutional and high net worth investors.
"The tax credit aspect is a comparison to other tradable State and Federal Tax Programs that are in demand by tax credit buyers and their representatives", Rutman states.
Rutman gives a primer on the differences and offers an innovative structured finance model that is applicable to film investments
THE NEW MARKETS TAX CREDIT
The New Markets Tax Credit (NMTC) Program permits taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated Community Development Entities (CDEs). Substantially all of the qualified equity investment must in turn be used by the CDE to provide investments in low-income communities. The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year credit allowance period. In each of the first three years, the investor receives a credit equal to five percent of the total amount paid for the stock or capital interest at the time of purchase. For the final four years, the value of the credit is six percent annually. Investors may not redeem their investments in CDEs prior to the conclusion of the seven-year period.
The FEDERAL HISTORIC PRESERVATION TAX INCENTIVES PROGRAM
The 20% tax credit Preservation Tax Incentives reward private investment in rehabilitating historic properties such as offices, rental housing, and retail stores. Abandoned or under-used schools, warehouses, factories, churches, retail stores, apartments, hotels, houses, and offices in many cities have been restored to life in a manner that retains their historic character. The Preservation Tax Incentives have also helped to create moderate and low-income housing in historic buildings.
The Historic Preservation Tax Credit Program benefits the owner, the occupants, and the community by:
o Encouraging protection of landmarks through the promotion, recognition, and designation of historic structures
o Increasing the value of the rehabilitated property and returning underutilized structures to the tax rolls
o Upgrading downtowns and neighborhoods and often increasing the amount of available housing within the community.
American Jobs Creation Act Of 2004 100% Federal Deductions + 20-30% State Tax Credits!
In the United States, the 2004 enactment of Section 181 of the Internal Revenue Code of 1986 (the