Entertainment Production Cap FAQ

Effective January 11, 2011, LAMC Section 21.109, Subsection (c) is amended by raising the minimum threshold to $5,000,000 and the maximum threshold to $12,000,000. Rather than a lookup table or schedule, the tax will now be computed using a rate-per-thousand of production costs. Therefore, the minimum tax shall be $145 per year or fractional part thereof for the first $5,000,000 of tax measures, plus $1.30 per year for each additional $1,000 of the measure of tax or fractional part thereof in excess of $5,000,000. The maximum tax shall be $9,100 for all measures of tax greater than $12,000,000.

Example;

If a production company generates production costs of $2,200,000 in 2016 what would be the tax due in 2017?

Since the production cost of $2,200,000 is below the minimum threshold of $5,000,000, the production company will pay the minimum tax of $145.

If the same production company had generated production costs of $10,000,000 in 2016 what would be the tax due in 2017?

The tax measure is the production cost of $10,000,000. The tax liability would be $145 for the first $5,000,000, plus $1.30 for each additional $1,000 or fractional part there of, which computes to $6,500. The tax due is $145 plus $6,500 for total tax due in January of 2017 of $6,645.

$10,000,000
-   5,000,000
$   5,000,000
 gross production cost
 minimum tax*
 
   
$    145
   6,500
$ 6,645
 minimum tax*
 (5,000 at $1.30)
 Total due

If the production company had production costs of $15,000,000 in 2016 what would be the tax due in 2017?

Since the production cost exceeds the maximum threshold of $12,000,000, the production company’s tax liability would be the maximum tax, which is $9,100