California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 3.5 - Bank and Corporation Tax › Subchapter 17 - Allocation of Income › Article 2.5 - Uniform Division of Income for Tax Purposes Act › Section 25137-8.2 - Motion Picture and Television Film Producers, Distributors, and Television Networks - Apportionment of Income

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) In General. When a business entity in the
					 business of producing or distributing motion picture, film, or television
					 programming, or television commercials, whether broadcast or telecast through
					 the public airwaves, by cable, direct or indirect satellite transmission, or
					 any other means of communication, either through a network (including owned and
					 affiliated stations) or through an affiliated, unaffiliated, or independent
					 television broadcasting station has income from sources both within and without
					 this state, the amount of business income from sources within this state shall
					 be determined pursuant to this regulation. This regulation does not apply to a
					 business entity that earns receipts from the provision of cable television
					 services.
(b) Definitions.
For purposes of this regulation only, the following
						definitions shall apply.
(1)
					 "Advertising revenue" includes advertising from all sources, including but not
					 limited to online advertisements, embedded advertisements, product placement,
					 barter transactions, and the sale of air time used for advertising
					 purposes.
(2) "Cable television
					 services" means the transmission to subscribers of video programming or other
					 programming service over a cable system.
(3) A "distributor" is a business entity
					 that, upon completion of production, licenses a film for exhibition by a
					 related or unrelated third party. The distributor may also develop and fund the
					 campaign to market the film. A theater that exhibits the film is not a
					 distributor based upon that fact. A producer may also be a distributor if it
					 licenses its own films or those of others for exhibition.
(4) "Film" means the physical embodiment of a
					 play, story, or other literary, commercial, educational, or artistic work,
					 produced for telecast, as a motion picture, video tape, disc, or any other type
					 of format or medium.
(A) A "film" is deemed to
					 be tangible personal property.
(B)
					 "Film" does not include video cassettes or discs sold for personal
					 use.
(C) Each episode of a series
					 of films produced for television shall constitute a separate film
					 notwithstanding that the series relates to the same principal subject and is
					 produced during one or more television seasons.
(5) A "producer" is a business entity that
					 develops and creates motion picture, television, or web-based
					 content.
(6) "Release date" means
					 the date on which a film is placed in service. A film is placed in service when
					 it is first telecast or exhibited to the primary audience for which the film
					 was created. Thus, a motion picture theater film is placed in service when it
					 is first publicly exhibited for entertainment purposes and an educational film
					 is placed in service when it is first exhibited for instructional purposes.
					 Each episode of a television series is placed in service when it is first
					 telecast. A film is not placed in service merely because it is completed and
					 therefore in a condition or state of readiness and availability for telecast or
					 exhibition, or merely because it is telecast or exhibited to prospective
					 exhibitors, sponsors, or purchasers, or it is shown in a "sneak preview" before
					 a select audience.
(7) "Rent" shall
					 include license fees for the exhibition or telecast of films.
(8) A "subscriber" to a subscription
					 television telecaster is the individual residence or other outlet that is the
					 ultimate recipient of the transmission.
(9) "Tangible personal property" used in the
					 business, whether owned or rented, shall include but is not limited to sets,
					 props, wardrobes, and other similar equipment.
(10) "Telecast" means the transmission of an
					 electronic signal or other signal by radiowaves or microwaves or by wires,
					 lines, coaxial cables, wave guides, fiber optics, satellite transmissions
					 directly or indirectly to viewers or subscribers, or by any other means of
					 communication.