Hawaii Administrative Rules › Title 18 - DEPARTMENT OF TAXATION › Chapter 235 - INCOME TAX LAW › Subchapter 1 - GENERAL PROVISIONS › Section 18-235-17-07 - Qualified productions; $200,000 threshold determination

Current through June, 2024
(a) Section
				235-17(d)
				(2), HRS, requires that a production have
				qualified production costs totaling at least $200,000.
(b) Each production must independently meet
				the $200,000 qualified production cost threshold imposed by section
				235-17(d)(2),
				HRS. A taxpayer may not combine the qualified production costs of separate
				productions to meet the $200,000 qualified production cost threshold. However,
				a taxpayer may combine the qualified production costs of multiple taxpayers
				associated with a single production to meet the $200,000 qualified production
				costs threshold.
Example 1:
J3T Productions is a calendar year
				  taxpayer and begins producing its film in the State on January 1, 2020. During
				  the tax year, the production incurs qualified production costs totaling
				  $75,000. Because the $200,000 qualified production costs threshold has not been
				  met, J3T Productions does not qualify for the tax credit and cannot claim the
				  tax credit.
Example 2:
J3T Productions produces four
				  productions throughout the taxable year, with each production incurring
				  qualified production costs of $75,000. For the entire taxable year, J3T
				  Productions has incurred qualified production costs in excess of $200,000 for
				  all productions. Because no individual production incurred qualified production
				  costs of at least $200,000, J3T Productions cannot claim the credit. This is
				  true even though J3T Productions incurred qualified production costs in excess
				  of $200,000 in the aggregate during the taxable year.
(c) If in one tax year a production does not
				meet the $200,000 qualified production costs threshold imposed by section
				235-17(d)(2),
				HRS, but incurs qualified production costs in a subsequent tax year for the
				same production that when combined with qualified production costs in the
				previous tax year satisfy the $200,000 threshold, die taxpayer may claim the
				credit under section
				235-17,
				HRS, for the production. To claim the credit, the taxpayer must submit a
				production report to the Hawaii film office as described in section
				18-235-17-03(b). The Hawaii film office will issue a certificate to the
				taxpayer certifying the amount of the qualified production costs for the prior
				year. To properly claim the credit for the prior year, the taxpayer must amend
				its income tax return for that year and attach the certificate to its amended
				tax return, along with any other required forms.
Example 1:
Assume the same facts as Example 1
				  under subsection (b), except that in June of 2021, the same production incurs
				  qualified production costs totaling $250,000. Total qualified production costs
				  associated with the production now exceed $200,000. Because the production now
				  has qualified production costs totaling at least $200,000, J3T Productions can
				  file an amended return for 2020 taking into account the $75,000 in qualified
				  production costs incurred during 2020; provided a timely amended return is
				  filed within twelve months following the close of the taxable year for which
				  the credit may be claimed.
Example 2:
Assume the same facts as Example 1
				  under subsection (b), except that in June of 2021, the same production incurs
				  qualified production costs totaling $75,000. Total qualified production costs
				  associated with the production total only $150,000. Because the $200,000
				  qualified production costs threshold has not been met, J3T Productions cannot
				  claim the tax credit.