# 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