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MyWikiBiz, Author Your Legacy — Wednesday November 20, 2024
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==Usual Funding Modes==
==Usual Funding Modes==
In the usual case, the film company obtains the tax credit after completion of filming. Our concept is to reverse the scenario: The producers of Never Split Tens will be obtaining a tax credit and are seeking an entity or individuals to provide a loan based on that tax credit as collateral before production begins. Accountants are encouraged to suggest this concept to their select clients seeking substantial no-risk tax savings.
In the usual case, the film company obtains the tax credit after completion of filming. Our concept is to reverse the scenario: The producers of Never Split Tens will be obtaining a tax credit and are seeking an entity or individuals to provide a loan based on that tax credit as collateral before production begins. Accountants are encouraged to suggest this concept to their select clients seeking substantial no-risk tax savings.
==Why Isn’t Everyone Doing This?==
As we will show, up to a 58% return on the investment can be obtained depending on the federal tax bracket. The obvious question is why aren’t all wealthy individuals and corporations utilizing this?
The answer lies in the Illinois income tax rate. As will be seen in the examples provided later, a funding entity or individual must have a large Illinois tax liability to be able to take advantage of the Illinois Film Production Services Tax Credit Act of 2008. The previous 3% tax rate did not create a sufficiently large tax liability. The 67% increase to a 5% tax rate now makes many more entities and individuals able to take advantage of that state law. Corporations and partners in accounting firms are now beginning to see the advantage of the concept we are proposing.
==Funding for Never Split Tens==
==Funding for Never Split Tens==
==Summary==
==Summary==
The loan/investment proposal takes advantage of Illinois and federal statutes and now promises a large return because of the increase in the state of Illinois income tax rate to 5%.
For an up to eight month loan of $2.9 million, the loaning entity or individuals receive $3.0 million (Illinois income tax credit) + $2.9 million (Federal income tax deduction) = $5.9 million in consideration. Based on a 20% corporate federal tax bracket, the net "earnings" are $100,000 + $580,000 = $680,000. That yields an annualized 35% return on the $2.9 million. Based on a 35% individual federal tax bracket, the return is equivalent to an annualized 58% return.
For an up to eight month loan of $2.9 million, the loaning entity or individuals receive $3.0 million (Illinois income tax credit) + $2.9 million (Federal income tax deduction) = $5.9 million in consideration. Based on a 20% corporate federal tax bracket, the net "earnings" are $100,000 + $580,000 = $680,000. That yields an annualized 35% return on the $2.9 million. Based on a 35% individual federal tax bracket, the return is equivalent to an annualized 58% return.
