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Effective July 1, 2005, LAMC Section 21.109, Subsection (c) is amended by raising the minimum threshold to $2,500,000 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 $2,500,000 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 $2,500,000. The maximum tax shall be $12,495 for all measures of tax greater than $12,000,000.
A production company generates a total of $2,200,000 in production costs in 2005.
What would the production company’s tax liability be in January of 2006?
Since the production cost of $2,200,000 is below the minimum threshold of $2,500,000, the production company will pay the minimum tax of $145.
If the same production company had generated production costs of $10,000,000 what would be the tax due?
The tax measure is the production cost of $10,000,000. The tax liability would be $145 for the first $2,500,000, plus $1.30 for each additional $1,000 or fractional part there of, which computes to $9,750. The tax due is $145 plus $9,750 for total tax due in January of 2006 of $9,895.
| $10,000,000 - 2,500,000 $ 7,500,000 |
gross production cost minimum tax* |
| $ 145 9,750 $ 9,895 |
minimum tax* (7,500 at $1.30) Total due |
If the production company had production costs of $15,000,000 what would be the tax liability?
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 $12,495.
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