Transferable Tax Credits Update

Transcription

1 Transferable Tax Credits Update Marco Cordova, CPA Vice President EP Financial Solutions David Gendron Managing Director Three Point Capital

2 OVERVIEW Trends and what to look for Recent statutory, regulatory, administrative/policy changes relating to transferable tax credits Focus on certificated transferable Film & Historic Preservation Tax Credits with recap on few other credits Best practices when transferring tax credits (mainly from a buyer s perspective) 2

3 TRANSFERABLE FILM TAX CREDIT STATES 3

4 TRANSFERABLE FILM TAX CREDITS Recent statutory, regulatory, administrative/policy changes relating to certificated transferable tax credits Trends focus on states that are growing, changing or cutting their programs 4

5 TRANSFERABLE FILM TAX CREDITS California Film & TV Tax Credit Program 2.0 (AB-1839) Effective July, 2015 through 2021 Increases annual program funding to $330MM Only $16.5MM transferable (5% allocated to Indy Films) Competitive application (jobs ratio) $2.5MM maximum / typical transaction 5

6 TRANSFERABLE FILM TAX CREDITS Ohio Motion Picture Tax Credit (HB390) Allows production company to either a refundable or a transferable tax credit One time transfer to one or more taxpayers Offsets Ohio Commercial Activity Tax 6

7 TRANSFERABLE FILM TAX CREDITS Connecticut Film Tax Credits issued on or after 7/1/15 have been extended from 3 years to 5 years Pennsylvania (HB 1198) Effective July 1, 2017, the new law increases annual funding for program from $60M to $65M Rhode Island (HB 7454) Extends Transferable program through

8 TRANSFERABLE FILM TAX CREDITS Georgia Film Tax Credit Program New electronic transfer filing requirements DOR voluntary production costs review report modifications Stricter tax return filing requirements for the Seller Additional auditors for post-tax return review audits 8

9 TRANSFERABLE FILM TAX CREDITS Louisiana Motion Picture Investor Tax Credit Program Claim cap - $180MM per year (Act 134) Fiscal Years , , and Moratorium of state s partial buy back of tax credits for Fiscal Year (Act 134) LDR website to track program caps 9

10 TRANSFERABLE FILM TAX CREDITS Louisiana Motion Picture Investor Tax Credit Program 5 year carryforward for projects certified after 1/1/16 (LDR-RIB No ) Tax credits after 7/1/15 will be deemed earned at time of final certification (LDR-RIB No ) New broker registration requirements (LAC 61:III.2701) 10

11 TRANSFERABLE FILM TAX CREDITS Massachusetts (SB 2441) Transferable tax credit for live theatre, include pre- Broadway, pre-off Broadway, and tour launches 11

12 TRANSERABLE FILM TAX CREDITS Less Active Transferable Film Tax Credits States Alaska (SB 39 moved Sunset date to 6/30/15) Florida (Program Sunset 6/30/16) Missouri (Program Sunset 11/30/13) New Jersey (Program Sunset 6/30/15) Governor Christie vetoed S 779 and S

13 TRANSFERABLE HISTORIC PRESERVATION TAX CREDITS 13

14 TRANSFERABLE HISTORIC PRESERVATION TAX CREDITS Updates Alabama (Act ) Program sunset on 5/15/16 for new applications Approved applicants still qualify for credits Arkansas Historic Rehabilitation (Act 567) Adds an emergency clause for funding this act 14

15 TRANSFERABLE HISTORIC PRESERVATION TAX CREDITS Updates (Continued) Georgia (Act 211) Effective 1/1/16 Tax credits previously claimed but not used by such taxpayer may be transferred or sold in whole or in part. Taxpayer who earned a credit, and no subsequent good faith transferee subject to recapture, reduction, disallowance, or other failure related to such credit 15

16 TRANSFERABLE HISTORIC PRESERVATION TAX CREDITS Updates (Continued) Georgia (Act 211) Effective 1/1/16 Maximum credit for non-residential certified structures increased to $5MM from $300K $25MM cap for larger scale projects, Projects receiving $300K+ in tax credits Projects that are subject to cap have priority 16

17 TRANSFERABLE HISTORIC PRESERVATION TAX CREDITS Updates (Continued) Illinois Sunset date of 12/31/16 North Carolina (Session Law ) Effective 1/1/16 and Sunset 12/31/19 Transfer of credit involves transferring ownership interest Texas Effective 1/1/15 More projects will receive approval because some Counties are funding surveys Long term lessee can be considered an owner if 27.5 years (residential) or 39 years (nonresidential) 17

18 ADDITIONAL PROGRAMS UPDATES Renewable Energy North Carolina (SB 372) Extends expiration of tax credit from 1/1/16 to 1/1/17 Florida Renewable Energy Technologies ITC Tax credit expires on 1/1/17 18

19 BEST PRACTICES (FROM A BUYER S PERSPECTIVE) Know when tax credits may be utilized / timing of tax credit transfer Beware of any tax credit limitations Protect your company from potential recapture if needed Request tax returns or engagement letters if needed Viable Guarantee Obtain proof of end title or other requirements if needed 19

20 BEST PRACTICES (FROM A BUYER S PERSPECTIVE) Risks / Rewards for committing to a tax credit that requires financing from a third-party Look out for transferable tax credits that are no longer active, but can still be used to offset current or future tax liabilities Alaska New Jersey Oklahoma 20

21 QUESTIONS?? / COMMENTS Questions & Comments 21