DP Needed for Full Length Feature for Fall/Winter 2007 in San Antonio/Austin, TX Area

[Jeff Kilgroe]

Here in the USA, a service is typically something performed by someone in exchange for compensation. If a DP shows up on a shoot and does his thing, even if he provides all the camera gear, he is performing a service. Now at the end of a shoot, if he hands over tapes or other media containing what he shot, then those are tangible goods (so is the intellectual property contained on the media). So he technically should break out the costs of the media handed over and any applicable taxes as a separate portion of his invoice and/or contract.

As for setting up separate companies, no need to do that, although it could simplify some things, possibly complicating others. But It's entirely possible to have your company purchase equipment and then the company can be compensated (by itself) via the production for usage of the equipment. Equipment, wheather it's camera gear, construction equipment, office equipment like copiers, etc.. can be charged or credited internally for usage within most buisness structures. I can buy RED and I can produce a feature using RED and in my internal accounting, this feature can be a specific job. This job has its own budget and included in that budget can be funds that return to the company for usage of the RED camera. As in a rental or use fee... May as well do this because it is a piece of equipment that has a fair market value for its use and if your own jobs can't pay for your equipment, then why buy it?

I'm looking into article 181 and I'm a bit hazy on some of the details. I need to find an attorney and/or accountant in my area that has a better understanding of it. However, it's so vaguely written that I fear it's wide open to interpretation and I could see my accountant and government auditors in an argument over what is deductable and what isn't.

So article 181 is a nice theory and I'm definitely willing to try it. But I'm not confident enough to go shoot a feature with funds I can't pay back if my deductions don't come through.

 

[Jason Francois]

It's amazing to me that once something is developed as a legal document, it becomes impossible to interpret. You almost wonder if most legal papers aren't meant to trip people up.

Much of 181 is pretty loosely defined as AppliedVisual mentioned. Could be OK or could be trouble if the government decides to push back on something. they also speak about being able to reevaluate at times as well.

It would be tough to move forward on a project under one ideal and have it evaporate.

Oh, well. I am going to keep digging and contact and attorney/accountant in the next few weeks.

 

[S. Um]

You are correct. I hope I didn't give the impression that it was 75% of the total production cost. It is basically 75% of the costs have to go toward director, producers, actors (basically cast & crew compensation). That is why I would prefer to hire a DP with a RED ONE and pay him/her directly instead of purchasing the camera, because Article 181 will only benefit our sponsors and contributors if I hire someone and pay them instead of purchasing the equipment myself. The reason for 181 was that many productions were moving to Canada and other countries, and this was one way to keep some of these runaway projects from going elsewhere. What the act is intended to do is bring more money to the US economy by hiring film crews working in the US.

I don't think we're connecting yet. You're saying that 75% of the costs have to go to the cast and crew. I'm saying that 75% of the compensation have to go to cast and crew in the U.S. Say your production costs $500k, but you only paid $100k in compensation to cast and crew. As long as at least 75% of that $100k compensation was in the U.S., then you can write off the whole $500k production cost. So it doesn't matter if you buy a Red or hire a DP with a Red.

So article 181 is a nice theory and I'm definitely willing to try it. But I'm not confident enough to go shoot a feature with funds I can't pay back if my deductions don't come through.

Definitely don't spend the money if you can't afford to lose it. This law is not intended for people to avoid paying taxes, just to encourage "low" budget production in the U.S. It can take several years to recoup the costs for movies and TV shows, and usually production companies have to amortize the cost over several years. This just allows them to take the full deduction in the first year. They still have to pay taxes when (or if) the money comes in.

Again, I'm not an accountant.

 

[donatello b]

i agree with Sumfun - the Article doesn't state 75% of production cost but 75% of compensation ($$) to crew/talent/relevent personal must go to persons/company's in USA .. the persons do NOT have to be US citizens .. they must do the work and be paid on USA soil ( you can bring in foreign talent) ...

http://www.fvldlaw.com/articles/FVLD_Legal_Update_Runaway_Productions_0606.pdf


here's the way i look at it ... if i invest 5k in a project i know from the start it has a 90%+ chance it is not going to make a dime - then i might have to wait 5-10 year to write it off as it goes through it's run cycle..
under 181 i can write it off NOW - now any $$ i receive from project down the line i'll have to declare as income at that time ...
if i give to a non profit film i can write it off in the current year and there is no $$ income down the line ...

 

[Rogelio Salinas]

I don't think we're connecting yet. You're saying that 75% of the costs have to go to the cast and crew. I'm saying that 75% of the compensation have to go to cast and crew in the U.S. Say your production costs $500k, but you only paid $100k in compensation to cast and crew. As long as at least 75% of that $100k compensation was in the U.S., then you can write off the whole $500k production cost. So it doesn't matter if you buy a Red or hire a DP with a Red.

I meant to say compensation instead of costs, but I believe you may be right about purchasing the RED. So if $50,000 is spent on equipment and extra $10,000 is spent on compensating cast and crew, then the entire $60,000 can be written off, is this right? I will have to look a little further into it.

 

[S. Um]

Yes, that's what I think. The FVLD article seems to agree as well.