San Francisco Tax Preparation / CPA: CA – California Film and Television Tax Credit Program Expanded

Filed in CCH NEWS FEED by on August 28, 2021

California expanded its film and television tax credit program. A new law makes the following corporation franchise and income and personal income tax changes:

  • provides an additional $75 million in credits each year for fiscal years 2021-22 and 2022-23 for recurring television series;

  • provides an additional $15 million in credits each year for fiscal years 2021-22 and 2022-23 for relocating television series;

  • limits the amount of credits a recurring television series receives in a subsequent season to the amount reserved in its prior fiscal year;

  • requires the California Film Commission to redirect, reallocate, and negotiate reduced allocations if it projects that there will be insufficient credits available to fund all recurring television series;

  • establishes a new credit for productions filmed at certified studio construction projects (discussed further below);

  • requires credit recipients to provide data on the diversity of their workforces;

  • requires the Commission to report annually to the Legislature on the diversity information collected and the diversity of the industry in general;

  • extends the due date for the Legislative Analyst’s Office to provide its report evaluating certain credits, and requires the report to include information on the film and television tax credits; and

  • states that if any of these tax credits is ruled invalid or discriminatory, taxpayers will not need to repay the credits.

Credit for Productions Filmed at Certified Studio Construction Projects

For taxable years beginning on or after January 1, 2022, and before January 1, 2032, California provides a new credit for the production of a qualified motion picture in the state at a certified studio construction project. The Commission may allocate a total of up to $150 million of these credits. The credit amounts and requirements are similar to those for the film and television tax credit, except they are:

  • allocated on a first-come, first-served basis, rather than competitively; and

  • limited to $12 million per production.

“Certified studio construction project” means the construction or renovation of one or more soundstages in California that is certified by the Commission to meet the following requirements:

  • costs at least $25 million over no more than five years;

  • is performed according to certain labor requirements;

  • commences after July 21, 2021; and

  • has not received a California Competes Grant for wages or investment related to the project.

A “qualified motion picture” for purposes of the new credit is a motion picture that:

  • meets the requirements for the film and television tax credit;

  • films at least 50% of its principal photography stage shooting days at a certified studio construction project, for which certification was issued within the prior 36 months;

  • incurs at least $7.5 million in qualified wages for filming at a certified studio construction project in the taxable year for which the credit is claimed;

  • is produced by a majority owner of the soundstage or a long-term (10 years or more) lessee; and

  • provides a diversity workplan approved by the Commission.

A taxpayer’s credit percentage may be increased by up to four percentage points if the Commission determines that it has met or made a good faith effort to meet the goals in its diversity workplan.

Taxpayers generally may not receive the new credit if they receive a credit under the existing film and television tax credit provisions for the fiscal year.

If the credit allowed exceeds a taxpayer’s tax liability, the excess may be carried forward to the following tax year and the succeeding eight tax years, if necessary, until the credit is exhausted. Ch. 114 (S.B. 144), Laws 2021, effective July 21, 2021, and applicable as noted