Right to Funds from Sale of Tax Credits at Issue In Litigation Between Production Companies
State tax credits are valuable tools for helping meet the costs of producing films, TV shows, commercials, and other media and entertainment productions. But if more than one production company is involved with a project, a legal dispute can arise over which company owns the right to the tax credit funds.
October 31, 2022 at 01:12 PM
5 minute read
This article appeared in Entertainment Law & Finance, your monthly source for real-world news and strategy from major players in entertainment, contract and intellectual property law — serious analysis of the issues and case law that affect your practice.
State tax credits are valuable tools for helping meet the costs of producing films, TV shows, commercials, and other media and entertainment productions. To entice production companies to work locally — and depending on its particular tax-credit program — a state may allow production companies to use the credits to pay tax liabilities to that state, as collateral for loans and even to sell the credits to third parties.
But if more than one production company is involved with a project, a legal dispute can arise over which company owns the right to the tax credit funds. That's what happened in Feel Films Ltd. v. AP Production Services Inc. (APP), 21 Civ. 451 (S.D.N.Y. 2022), a current case involving Georgia's tax credit incentives.
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