Unless that’s the wrong lesson to learn from this AP story running in the Leesville Leader?:
Probe continues into “LIFT” movie tax credits
NEW ORLEANS (AP) – Two movies made in Louisiana were granted tax credits based on investment figures that exceeded the actual production costs of the films, according to an independent audit cited in a Tuesday newspaper story in New Orleans.
The two films are the newly released thriller “Mr. Brooks” and the 2004 made-for-TV movie “The Brooke Ellison Story.” The two films were made under a 2002 Louisiana law that granted state income tax credits of 15 percent of the costs of making a movie, even if some of the money was spent outside Louisiana. A revised law in 2005 raised the credits to a rate of 25 percent, but only for movie expenses within the state. “Mr. Brooks” was cleared for tax credits based on $34.1 million in movie expenditures, a figure that far exceeded the actual $18.5 million production cost at least partly because of double-counting of investments, according to the independent auditor of the movie. The auditor told The Times-Picayune that form of accounting was approved by Mark Smith, the state’s former top film recruiter.
The New Orleans film company says it was entitled to take tax credits for the additional expenditures under the rules at the time, but the Louisiana Department of Economic Development says the accounting practices were not allowed.
Much of the dispute centers on the role played by Smith, and whether he gave the green light for a system of double-counting investment expenditures, Hollywood studio surcharges on movies and various marketing and distribution costs that officials say should not have been permitted. Smith has declined to comment.
“In hindsight, they may not like it, it may not look good, but all of LIFT’s credits were authorized,” London said.
Indeed. What would Hollywood be without its storied traditions of creative accounting? The full story, for the insatiable and bi-(accounting) curious, is here.
And hang on to your hats (and your savings accounts!): WGA negotiations begin soon!
