Louisiana Administrative Code › Title 61 - REVENUE AND TAXATION › Part I - Taxes Collected and Administered by the Secretary of Revenue › Chapter 65 - Louisiana Sound Recording Investor Tax Credit Program › Section I-6541 - Illustrative Examples of Production Expenses

Current through Register Vol. 50, No. 6, June 20, 2024
A. Eligible. Eligible production expenditures
				shall include, but not be limited to, studio rental, musician/ performance
				fees, travel and airfare if booked through a Louisiana travel agent, producer
				fees within limitation, legal fees within limitation, music copying fees,
				orchestration fees, music publishing/clearance fees, and fees for mixing and
				mastering only on recordings originally made in Louisiana.
B. Ineligible. Ineligible costs include, but
				are not limited to, CD duplication, costs for marketing and distribution and
				any costs associated with filming/video.
C. Limitations for Certain Transactions
1. Related Party Transactions. LED may
				request and use additional information in determining the extent to which
				expenditures for related party transactions will be certified, by requesting
				and obtaining documentation including, but not limited to, third-party
				contracts, notarized affidavits, tax records, W2s, 1099s and cancelled checks.
				Related party transactions may be referred to the Office of the Inspector
				General for further review.
2.
				Producer fees may be subject to limitation as follows.
a. Applicants must provide detailed
				accounting and verification of expenditures relating to "all-in producer
				deals." For example, audits must reflect payments made to all vendors, and
				Producer Agreements should reflect the scope of services to be provided in
				Louisiana and include a clause allowing the State to audit the Producer's
				accounting records directly related to any expenses claimed for tax
				credits.
b. LED establishes a
				benchmark of up to 20 percent of total qualifying Louisiana production
				expenditures for Producers Fees (for the calculation, Louisiana production
				expenditures exclude any producer fees), which shall be considered fair market
				value. While applicants may enter into producer agreements with fees in excess
				of LED's approved benchmark, producer fee payments exceeding 20 percent may not
				be eligible to earn tax credits.
c.
				LED establishes a benchmark of up to 12 percent of total qualifying Louisiana
				production expenditures (for the calculation, Louisiana production expenditures
				exclude any producer fees), for related-party producer fee expenditures, which
				must be supported by a cost report or audit, when applicable, and documentation
				of services provided. Fair market value for related-party services rendered
				must also be established by submission of third-party contracts for
				similarly-sized projects and scope of work or other documents as approved by
				LED. While productions may enter into agreements with fees in excess of LED's
				approved benchmark, payments exceeding 12 percent will not be eligible to earn
				tax credits unless the benchmark is exceeded through expenditures (supported by
				a cost report or audit, when applicable, and documentation of services
				provided) under third-party contracts only with no related-party
				expenditures.
3. Legal
				fees shall be limited to no more than 10 percent of base investment.