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Yuri Rutman Encourages Illinois Companies, Hedge Funds, And Investors To Do Section 181 Deals


Submitted by: 72equity.com


2008-02-05 00:08:14

(OPENPRESS) February 5, 2008 -- A Chicago film finance and production company is offering an innovative way for high net worth investors, tax credit buyers, hedge funds and private equity groups, private and public companies, and their representatives, including tax attorneys, estate planners, and wealth managers to received 100% deductions for film investments as well as state income tax credits.

Yuri Rutman's Noci Pictures Entertainment is putting a slate of films to be shot in Illinois using an innovative hybrid tax, finance, risk minimization, and exit strategies that offer dollar for dollar Federal Tax Deductions, state income tax credits, a possible exit IPO on the London AIM., equity in a slate of films, as well as stimulating local economic development, and creating jobs, including for women and minorities.

"I don't know of any other alternative investment that can offer tax incentives, multiple exit strategies, as well as giving back to the local economy, while being involved with the moviemaking process, Rutman states, "that would add to the long line of recent films either shot in Illinois or about to shoot including "The Dark Knight", the upcoming John Dillinger film with Johnny Depp and Christian Bale, as well as a lot of other Hollywood films."

The American Jobs Creation Act Of 2004, the 2004 enactment of Section 181 of the Internal Revenue Code of 1986 (the "Code") marked an unprecedented change in U.S. policy toward the phenomenon known as "Runaway
Production".

Runaway Production refers to a film or television production that leaves one state or country to be filmed in another purely for economic reasons. This movement occurs because producers tend to film in the location where they can minimize production costs through tax incentives, cheaper labor.

Over the years, Canada has been the greatest beneficiary of U.S. runaway productions (according to some reports, Canada has claimed up to 80% of the U.S. runaways, generating an economic impact of $10.3 billion in production output in 1998 alone).

Section 181 represents the first time that the U.S. federal government has recognized this impact by passing tax legislation to actively combat the flight of film and television programming.

Section 181 permits a 100% write-off for the cost of certain audio-visual works, regardless of what media they are destined for (e.g., theatrical, television, DVD, etc.).

An individual or company who makes an investment into Section 181 qualified productions can take a 100% deduction of their investment against their passive income in the year their investment was made.

The deduction can be made against active income should the investment be made by or through a widely held C corporation. The law is in effect until December 31, 2008, therefore investments must be made before that date and the money invested into qualifying productions must be spent by then by the productions.

Rutman stressed that "As an example, should an individual or corporation that is taxed at a 35% tax rate have passive income to take a deduction against, then should that individual make a $1 Million investment into a qualified production or film fund, the actual net investment will be $650,000 since they can take a deduction against that full $1 Million against their passive income, and 35% of $1M is $350,000, which is the value of the deduction they can make in the year they make their investment.

But since Section 181 also allows for all other recourse debt costs which are usually associated with film finance, a $10 million dollar film, where only $3.5 million is equity, an investor can deduct $3.5 million dollars against the $10 million, especially if the latter is mezzanine or gap finance.

Plus, an additional 20% in Illinois tax credits can be generated.

"I am surprised how many investors, tax planners, and public and private companies have no clue about these benefits", Rutman adds. "Federal Preservation, and other real estate tax credits was the usual route for tax planning, but film production incentives offer a more liquid premium. Plus, it adds more value to job creation to people who really need it".

Rutman adds that he wishes there was more of a film finance and distribution infrastructure in Chicago. "Without sounding pretentious, I am probably 1 of two or three other film producers in town that understand sophisticated film finance and international distribution. Aside from the major Hollywood studios that are flocking to Chicago, many local filmmakers aren't conscious of the semantics and even politics involved in properly structuring film deals. I am pretty confident that once we are up and running, it will give a model to other local filmmakers on the right way to finance and produce a movie which film schools do not teach. And empower them to succeed for the long term".




Contact Info

72equity.com
Phone: 888-341-6888
Website: Not Given



Release Info

Metro Area: Los Angeles-Long Beach, CA Read More from this Metro Area
Country: United States Read more from this Country
Industry: Advertising / Marketing Read more from this Industry
Press Keywords: chicago business news,hedge funds, private equity news, pre-ipo,illinois manufacturing
Press Company: Noci Pictures Entertainment
Press Site: http://www.noci.com


 


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