Tax Incentives Available Under Section 181 and 168 for Films

Join Corky Kessler, ESQ for tax benefits and film funding information. He can be reached at corkykessler@aim.com.To learn more about Carole Dean and From the Heart Productions please visit www.FromtheHeartProductions.com. 

Transcript

SPEAKER_04 0:00

Love Top Radio.

SPEAKER_03 0:13

Hi and welcome to the Art of Film Funding. I'm your co-host, Claire Capan, along with Carol Dean, author of the best-selling book, The Art of Film Funding. Carol is also the founder and president of From the Heart Productions and the host of this show. Our guest, Corky Kessler Esquire, is a one-stop shop working at the law offices of Hal Corky Kessler for the entertainment industry. More than just a legal advisor, he works with clients to help get their films made. In 2017 and 2019, Corky was named Top Entertainment Lawyer in the United States. He's also been actively involved in the application of Section 168 of the Tax Cuts and Jobs Act, which was signed into law December 2017 and became active January 2018. Section 168 of the Tax Cuts and Jobs Act outlined the new incentives for film, television, and theater for five years. He's authored a reference book covering such federal and tax state tax incentives. Corky has assembled and built winning teams for more than 30 entertainment and other business ventures. He regularly speaks on the business and legal aspects of feature film development, including tax incentives. And Carol, Corky is also a generous donor to the Roy Dean Film Grant, right?

SPEAKER_04 1:54

Yes, he is, Claire. Thank you, Corky. Thank you for truly supporting independent filmmakers. Tell us more about what you're doing right now. I know you've been helping filmmakers with legal advice and support for over 30 years. So tell us what changes that you see in the industry right now with COVID.

SPEAKER_06 2:15

Okay, well, well, first of all, i uh uh if you want to have me give a grant of a couple hours of free service again, Carol, to your winner, uh your winner, uh I'm happy to do that.

SPEAKER_04 2:30

Oh my gosh, Carky, thank you so much because that's a that is like the cherry on the uh ice cream sundae. People love that when I tell them they get to talk to you about the their project and learn uh whatever they need on a legal advice. Thank you, Carky. That would be a great gift.

SPEAKER_06 2:49

Uh uh Okay, during COVID, uh I I tell people not that a lot of filming is is going on unless you are gonna go into a closed environment, like Tyler Perry has a studio in Atlanta, so when he makes his movies, everyone stays there. They don't leave there. So it's a controlled environment. So it's very hard to do stuff now unless you have a controlled environment and you have someone testing COVID every day, so it it increases your budget uh substantially. Uh but I tell people get prepared. You've got this freedom of time to get everything in line so when COVID settles down and you can do something, you're prepared to do it. Start building your team, start working on what's going on, start getting prepared so you you're not caught short doing that after COVID is pretty much done. And and so I try and encourage people now's the time to be as creative and moving forward outside of doing it to be prepared when things settle down.

SPEAKER_04 4:12

That's really important. Now's the time to use your creativity because you're sequestered. You can take some walks and think and w and develop your script, develop your project, right? That's what you're saying?

SPEAKER_06 4:26

Uh yes, yes. And start to build your team. Start to build your team. You know, a but but you know, a lot of people are in the development phase and they want to get ready to move forward when things open up. So w w uh uh when I talk about a one-stop shop, okay, I can get distributors, I can get casting directors, I can get insurance, I can advise them on the extension of 181 that I helped get going uh in uh December of this year, which now extended 181 for five years, Carol. Wonderful.

SPEAKER_04 5:11

That's incredible because we had to live with two or three years at a time, and it was always so scary. So tell us more about this 181 extension. It's now called a 168, is that right?

SPEAKER_06 5:27

Well, 168 i is different than uh 181. 181's better because spending triggers 181. Whereas for 168 you don't get the benefits until your film is put in service. That means shown at the end of that year. And that goes to the end of 2022, 168, but in in in 2023, the 100% loss under 168, if it's shown, goes to 80%, and then it goes down to 60%, then it goes down to 40%, then it goes down to 20%. So 181 is is is straightforward, it's five years, and 168 runs on 181 principles. 75% still have to be shot uh spent and performed in the United States, 25% uh uh anywhere. But the good thing about uh about both is although 181 is better, um I can cover the investor's money. I can cover every dollar that the investor puts in. I can cover it 70 to 76 cents on every dollar, which is amazing. There's no other business that you can cover their investment 70 to 76 on the dollar.

SPEAKER_04 7:01

Okay, now this is to get this so I understand it, there are two um two things running down, two laws, 181 and 168. But the 181 is the old 181, we just got an extension on that for five years, so that's back in play, right?

SPEAKER_06 7:19

Yeah, that'll end at the end of 2025.

SPEAKER_04 7:23

All right, to 2025 that ends.

SPEAKER_06 7:26

Right.

SPEAKER_04 7:26

Okay.

SPEAKER_06 7:27

Right.

SPEAKER_04 7:28

But then uh you say the spending is what triggers the 168.

SPEAKER_06 7:34

No, no, no, no, spending no. No. 181 spending triggers it. 168, your film has to be shown, or TV or play. It has to be put in service, as they say. That's the difference. You have to put it out there. Whereas 181, it's just spending, it's so much easier. Never has to be shown.

SPEAKER_04 7:58

181 is just spending, so you get your uh benefits on the spending side, but the one sixty-eight has to be in service, meaning it has to be shown.

SPEAKER_05 8:09

Right.

SPEAKER_04 8:12

Now when it first came out, it wasn't clear what that meant. So are we still at the place where it uh to be shown could be that you could actually rent a theater and put some people in the theater, uh, and that would do that.

SPEAKER_06 8:26

Yeah, yes. Yes, or you can uh yeah, j just show it. It it d there's no further definition than that than showing. I tell people uh if you're getting close to the end of 2022 where it's still a hundred percent loss, I say rent a theater, charge it a buck for people to see it, and then you've shown it.

SPEAKER_04 8:49

Right. Right, that makes sense. Okay.

SPEAKER_06 8:53

But still uh but still uh one hundred-one, they'd still have one eighty-one, and they don't have to show it. So that's the the uh I mean benefit. Uh y you can't use both, but here, 168 has no dollar limit. It could be a hundred million dollar project, whereas 181, it's a $15 million loss, or you can go to a $20 million loss if you spend a significant amount in a low-income or depressed area. So, but still, look, for the person who's got a $15 million or $20 million, a movie or lower, $181 is still better. $181 is still better. And you can grandfather your film. So as soon as you um have a screenplay, you have a summary budget, you do one day of photography with some dialogue that doesn't have to remain in the project. One day from your screenplay with some dialogue, and if you have your investor documents that I prepare, but you don't need investors, once you have that, you are grandfathered forever. That'll never expire.

SPEAKER_04 10:14

My gosh, that's uh that is brilliant.

SPEAKER_06 10:17

That must have been hard work to get that approved, that long-term uh uh because if it's grandfathered, meaning a budget, a summary budget, it can change. A screenplay or or teleplay, if it's television, but that can change. Um one day of photography with some dialogue, you can shoot it on your iPhone, it doesn't matter, but you don't have to use it in the project, and the investor documents that I prepare, but those can change. Once you have the those set up, you're grandfathered forever. There's no end date.

SPEAKER_04 10:59

That's brilliant. Well, Corky, tell us right now, how do people locate you? I mean what you want to give us an email address uh so people can find you.

SPEAKER_06 11:10

Uh uh okay. Uh the they can find me at Corky C-O-R-K Y Kessler K-E-S-S-L-E-R at AOL.com. Or or they can contact me on my cell, which is 312-925-2110. And and and then a couple other things. We're doing virtual panels for Sundance, and we have an Eventbrite. So if anyone wants to, it's just $50 for the panels. We've got great panels with distributors, funding, actors, managers. Um it's $50 and it's $10 to watch the pitches the next day. There's an Eventbrite. And if you want to get invited to the Eventbrite, to the panels for Sundance, which are January 30th and 31st, they're not on the Sundance site, but we do it during Sundance. Uh, you can contact me, or you can contact Carol, or you can contact Claire, and they will find me, and I'll send uh out an event bright for you to do. And then the other thing that that that I want to say, I'm bringing a group of filmmakers, television, and music people to Cuba uh in the fall. We were taking a trip to Cuba. If you want to be be included, I have to know soon. Uh I don't have a date yet. I just have to know if you have an interest in going now so I can include you. We're only taking twenty people, and uh we're gonna have panels and we're gonna have a be shown around Cuba for those that haven't been there.

SPEAKER_04 13:09

Wow, shown around Cuba, what a nice thing to do. That uh that sounds like a lot of fun. How how long would you be there?

SPEAKER_06 13:17

Uh five days.

SPEAKER_04 13:19

Oh, that's good. And would they um you can fly from any city that you're in to Cuba and meet you there?

SPEAKER_06 13:27

No, n no no. Well assuming that Biden opens it up, okay, which he said he is going to, yeah, yeah, we can f fly from anywhere. Uh uh, but but the cost i uh uh i except for flight is about three thousand dollars, which isn't bad.

SPEAKER_04 13:48

No, no, that's five days. And that's the hotel is included?

SPEAKER_06 13:53

Uh yes, hotel meals, uh everything. Uh we're gonna go to the Tropicano one night, we're gonna go to a a a cigar factory, we're we're we're gonna be showing the sites, um, but uh that's uh Cuba.

SPEAKER_04 14:13

Um that sounds great, because they tell me the food down there, Carky, is delicious.

SPEAKER_06 14:20

Uh uh uh uh so so we are um so I'm involved now in about twenty movies uh at various stages, but we're not moving forward on any of them because of COVID, but we are ready to move forward. I uh uh uh and if people hear this and they want to get my bio, Carol has it and she can forward it. Um and look, I I have to tell everyone, Carol is the greatest person to have on your team. Carol is so great, her grant is so great, her organization is so great. So to have Carol as a friend i is an invaluable uh asset.

SPEAKER_04 15:18

Corky, thank you so much. That is so very kind of you. That's so so sweet, thank you. I really appreciate that. We work really hard to take care of filmmakers, and I appreciate you so much. Um okay, I'm so excited for you. That sounds very interesting. Now, let me let me ask you about China.

SPEAKER_06 15:40

Well well, uh okay, I can't go to China yet. Okay, because of Trump. Uh huh. Okay, okay. So I haven't been invited since Trump has been president. So uh I have to wait until things uh settle down. Um uh uh so that's so you you asked me a question uh on the sheet that you sent me. Who is buying documentaries now? Yes. Um many, many, many festivals. Sundance sells more documentaries than any major film festival. Sundance is known to focus on documentaries, okay? Um and then and then can in May may not be in May because of the virus, it may be in late July or late August.

SPEAKER_02 16:39

Uh-huh.

SPEAKER_06 16:40

Uh they it that they haven't set a firm date yet. But if we have a live can, uh they're all invited to to my pajama party there, which is heralded as the best party of Cannes that I have at my villa, and then uh the panels and stuff. But I don't know what's going on for Cannes.

SPEAKER_04 17:02

Okay. Well we can get an update from you later in the year then. Um but the pajama party, tell me about that. Do we do people really wear their pajamas?

SPEAKER_06 17:13

Uh yeah. Well well by the way, at at at Virtual Sundance on on Saturday night the thirtieth, we have a virtual pajama uh event. Virtual people are in pajamas talking. Okay, but okay. So so so two years ago when we had our last canned pajama party uh in the villa, we had we had three hundred and fifty people come in pajamas. Brad Pitt. Brad Pitt, Merrill Streep. Uh they all came in PJs.

SPEAKER_04 17:57

What fun. I love it.

SPEAKER_06 18:00

Well, we figured Cannes very dressy, but let's dress people down. So people I mean I I I was amazed that 350 people came and then a in in the can i i in the can publication that they put on that if anyone didn't go to Corky's pajama party, uh they missed the best party of Cannes.

SPEAKER_04 18:26

Oh my goodness, what what a nice thing to say. Wow. Well uh and on this um uh event, this virtual event, I'm still not sure how do people network? Like when when you have your panel, tell us how that works.

SPEAKER_06 18:44

They're all networked. They're all networked. We're we're we're all on Zoom. Uh-huh. We're all on Zoom. They network, but they really network more at the virtual pajama party that night, Saturday night. Uh-huh. There there's networking all the time. I introduce people who I know are on to ask certain questions. You can ask questions to distributors, to funders, to actors, to managers. Uh we have a whole panel on festivals. Um so i i it's a very interactive day, night, and then Sunday are the pitches. Okay. And for the first time, for the first time, you could watch the pitching for ten dollars. That's all you have to do. So it's fifty dollars for the panels, but if you want to just watch the pitches, it's ten dollars. If you want to do a pitch, it's another fifty dollars. But ten dollars, uh you can watch them.

SPEAKER_04 19:51

Well, that's really important for filmmakers because that's how you learn. And then you will announce the winner when? The next day, or when do you announce the winner? That same day?

SPEAKER_06 20:01

Uh uh uh that same day. Uh we got five five judges.

SPEAKER_04 20:06

Uh-huh. Yes, and they make their decisions d the during that time when they're being uh right afterwards they make a decision, huh?

SPEAKER_06 20:16

Well well, uh about an hour after the last one, yes.

SPEAKER_04 20:22

This is wonderful. So, yes, you get to see who won, and is there a second prize or a third or anything or no, no, no, but they have to use our benefits within a year or they lose it.

SPEAKER_06 20:38

Right. But okay. But but I can tell you, Carol, you you've been to some of mine.

SPEAKER_02 20:44

Yes.

SPEAKER_06 20:45

And and to date, as of today, of all those years that we've been doing these prizes for the best pitch, no one's ever used it.

SPEAKER_04 21:00

Carky, you're kidding me. Nobody's used the the prizes?

SPEAKER_06 21:04

No, because they've never gotten to the position to use it during the year. They they no one's used it. Nobody.

SPEAKER_04 21:15

That's that's incredible. Uh but they've got the pitch, they've got their paperwork ready, so uh they have to be really ready to get on the street and go for it. That's the point, don't they?

SPEAKER_06 21:27

They've got to be mentally sick. Uh uh-huh. Well, they have a year, okay, so we give them time. But but but but if they don't do it i i i uh uh uh in the year period of time from when they get it, uh it expires. But we've got great judges. Uh we've got people, uh Diane Ladd is very uh eager to talk to people.

SPEAKER_04 21:55

Oh that's wonderful, yes.

SPEAKER_06 21:57

And a and Queen Latifah. And I wow how d she's fun.

SPEAKER_04 22:03

That's good. Iced tea, that's wonderful.

SPEAKER_02 22:07

Yeah.

SPEAKER_04 22:08

And they are on the panel, the Sundance panel. Uh-huh. Okay. Yeah, that's something not to miss, Carthy. That's gonna be a lot of fun.

SPEAKER_06 22:34

Yes. He's on it too. He's on it too.

SPEAKER_04 22:38

Oh, great. Yes, I like him. That's fun. Okay. Well, um all right, so let's just get if anybody wants to get on the panel, it's an event, uh, eventbrite invitation. I'll send it to anyone who emails info at from the heartproductions.com and or um my email, Carol with an E, Lee Dean at Gmail, and we'll get you the information uh so that you can join online because what fun to sit at home and w and get to meet all these people, right?

SPEAKER_06 23:19

Uh yeah, plus if if they want to go to Cuba, they can contact me or you. Yeah. Okay Well, not not one. If they're interested, because we don't have a date yet, okay, so uh just interest and if they want my bio, they can contact you or me. But but but but but I have to tell people I want to encourage everyone that listens to this become a friend of Carol's. She is the best advocate for whatever you want to do. I'm trying to get Carol to concentrate in something other than documentaries, but so so Carol, uh let me tell you you uh about a doc that that I'm working on. Okay. Because since you're in the doc world and if you want to help, then you can. Th there's a doc called SOX. S O X. Are you you you're wearing socks? Okay. Socks.

SPEAKER_02 24:23

Uh-huh.

SPEAKER_06 24:24

Okay, but but it's i i it's SOX. Okay. And and did you ever do drying and you dry your socks and you only find one sock and you can't find the matching sock?

SPEAKER_04 24:41

Yes, so often, yes.

SPEAKER_06 24:43

Uh uh okay, so uh so uh so it's about a little boy i i i it's an animation project and Jerry Seinfeld's part of it. And Jerry Seinfeld's probably part of it. Okay, so y you i it's about a little boy whose mother always complains to this little five-year-old that she does his drying and where d does the sock go? She's got one sock, but she doesn't know what happens to all his socks. The kid gets so upset that he finds a hole behind a dryer and he crawls through it, and now he's in socks land. Every business is owned by socks. You've got a hairdresser, frilly socks, you've got a gay bar with gay socks, you've got a barber shop with socks, every business is run by socks, and the kid is looking for his matching socks. He just doesn't understand he figures they go to to this place. And and the message at the end is that we tell people it's okay if you have matching socks. We're all okay. There there's nothing wrong with a matching sock. And then we're gonna start manufacturing uh mismatched socks.

SPEAKER_04 26:09

Oh what fun. What fun. I would love that. It's so much stress going to buy it.

SPEAKER_06 26:17

Okay, so Carol, if you wanna be part of it and try and raise money for it uh or or g get involved in it, send an email to me and I'll put you in touch uh with them. You know who Naomi Weiss is, right? Yes, of course. Okay, uh uh this is hers and her daughter's project.

SPEAKER_04 26:41

Oh, wonderful. That sounds great. Oh, we'll all get a lot of um joy out of this film.

SPEAKER_06 26:52

Y yeah, yeah, so so email me if y you want me to put in touch with her.

SPEAKER_04 26:58

Okay, thank you. I will. Well, what's on the uh uh agenda, what else is on your agenda? You stay so busy, Corky.

SPEAKER_06 27:07

Yeah, uh well well I I uh am busy, uh I maybe come of counsel to to a firm but let you know it's a young firm because uh w what what I'd like to do is make sure my clients are always taken care of. So on the d day or days that that I want to pack it up and not do it, there's someone there, so I will keep you posted about that. Um Right. And uh so so I wanted to find uh young enough people that would be able to take care of my clients.

SPEAKER_04 27:47

Yes. Great idea. That's a great idea, Carky.

SPEAKER_06 27:54

Okay. Uh then you asked me before we go, you you you asked me, tell us any tips on selling your product to the to the streamers. Tell me what you mean by that.

SPEAKER_04 28:07

Well, um how let's say you have a a well-developed project, how do you get to Amazon, Netflix, uh, Apple, any of these streamers, how do you get into them? Uh, do you need a a lawyer or an agent or what are the requirements?

SPEAKER_06 28:27

No, you need an agent, a manager, a lawyer, or or someone who's a producer that has done work with Netflix or Amazon or Hulu or any of those or Amazon Prime. You you need someone to open the door. Okay? Um uh be uh uh uh because that's what people do. They turn like me, they turn on Netflix or Amazon Prime or Disney and we watch movies at night.

SPEAKER_04 29:06

Yes. So the idea is find someone either a producer who's already got an open door who has worked with them before, or a lawyer or an agent that can get you in, because it's really sort of a closed situation. You can't just walk in there. You have to go with someone.

SPEAKER_06 29:28

Yeah yeah, uh well yeah, I mean so uh and then y you said what genres are hot or easy to sell in features? Well uh uh uh uh if you want to get pre-sales, Carol, um you w wanna have uh horror, drama, action. Uh those are the supernatural, those are the the ones that generate pre-sales.

SPEAKER_04 30:00

Horror, drama, action, and supernatural.

SPEAKER_06 30:05

Right. Uh uh a horror films too.

SPEAKER_04 30:09

Horror, yeah. They are always in the hand and sometimes that's the best film for someone to make because if you were really clever you can make a low budget under a hundred thousand horror film and sell it. And then you've got uh a name for yourself. That's a good first film I find, don't you?

SPEAKER_06 30:31

Yes, but but uh but I know a distributor or two distributors that I can put those people in touch with.

SPEAKER_04 30:39

Oh good. Okay, because I'm working with the guy for a year and a half now on his horror film and it's really good. Uh it's well developed, so yes, that's good to know. Thank you. Well wonderful. I'm excited.

SPEAKER_06 30:58

Well, and the person you're working with should make sure the doc is 181. No matter how small the budget is.

SPEAKER_04 31:07

Make sure it's covered under 181.

SPEAKER_06 31:10

Okay.

SPEAKER_04 31:10

Uh uh-huh. All right. I will do that.

SPEAKER_06 31:17

Okay. All right. So all right, so so lots going on. Um there are any other questions, Carol.

SPEAKER_04 31:27

Um yeah, I just want to say how much fun you are, how much I love working with you. I think back to the time we were in uh hot springs, and uh you invited me with to go with you, and there was this table full of all full of guys, and I never had so much fun in my life. It was just getting a night out with the guys, and you all I just were in the best uh mood, and it was laugh after laugh. It uh you know how to have fun, Carky, and I really like to be around you. It's great.

SPEAKER_06 32:04

Well we well hopefully when uh the the dust settles and and I feel comfortable again uh w to travel uh w which may not be for a few months, we'll all get together. Okay. And you can't give hugs if you can't get near someone.

SPEAKER_04 32:29

I know, I know, it's so different. What we took for granted is what I'm missing the most. The luncheons, the dinners, the hugs, uh you know, just the personal conversation sharing ideas and thoughts. So we we have to learn how to use the zoom and continue with that, right?

SPEAKER_06 32:49

Well right, right, r r right. But but but we have been zooming uh oh plus I have a uh podcast.

SPEAKER_04 32:58

Oh, tell me about it.

SPEAKER_06 33:00

Okay, we we we are editing it now. Uh uh we've got four in the can. Uh I I'd love to get you, Carol, uh on one of the podcasts.

SPEAKER_04 33:11

Thank you. That would be lots of fun. Well, Carky, let me know so we can put that information in our newsletter and on our social networks. People will want to hear your podcast. That would be terrific.

SPEAKER_06 33:24

Yeah, I mean uh uh w uh we ha uh uh we had Rudy Langless. Uh uh uh uh we had great people on the podcast.

SPEAKER_04 33:35

Great. And so I know people will learn a lot and good information.

SPEAKER_06 33:42

So, all right. Okay, uh Carol. Um the the soonest thing that's on the agenda uh Cuba's not for a while, but the quickest thing is Sundance. Uh it's January 30th, uh are the panels. The night is the virtual pajama party. That's all included. And Sunday are the pitches. If you want to pitch, it it's an extra fifty besides fifty for the panels. If you want to just watch the pitches, it's it's ten dollars more.

SPEAKER_04 34:17

Okay, we'll get on that. That's gonna be a lot of fun, Carki. Thank you so much, and I hope you'll come back in a few months and bring us up to date with all your exciting events.

SPEAKER_06 34:29

Well, we okay, I definitely will, and uh I appreciate it. I I appreciate the opportunity to do this. Claire, thank you very much for for allowing me to to be on these. And uh Carol, I I hope uh we can do business again soon.

SPEAKER_04 34:54

Yes, stay here. Thank you so much, Corky. Yes. Okay, thank you.

SPEAKER_03 34:59

And Corky, it's always a pleasure. Always a pleasure to have you. Thank you.

SPEAKER_06 35:04

Okay, thank you. Thank you so much. Thank you both.

unknown 35:07

Okay.

SPEAKER_04 35:08

Okay, Corky. All right. Best of luck. Thank you, Claire. Thank you very much.

SPEAKER_03 35:13

You're welcome.

SPEAKER_04 35:13

Lots of love. Thank you, Claire.

SPEAKER_03 35:15

Be well, everyone. Thank you. Bye. Now, in its second edition, Carol Dean's popular book, The Art of Film Funding, has 12 new chapters to cover all areas of film financing and how to avoid expensive pitfalls. Learn how to start with an idea and end with a trailer. How to make an ask for money. Create your story structure and your trailer, legal advice, fair use, successful crowdfunding, how to ask for music rights, and what insurance you can't shoot without. Available on Amazon under Carol Dean and at FromTheHeartProductions.com. I want to remind our listeners that David Rakelin is a brilliant and talented award-winning musician who scores films and can compose music for a trio or for a full orchestra. David is a very good friend to the independent filmmaker and comes highly recommended by From the Heart Productions. If you need music to help tell your story, please contact him at davidwakeland.com. That's davidr-a-i-k-l-n.com. And Carol and I want to thank you for tuning in to the Art of Film Funding. Please visit our website at FromTheheartproductions.com. You can also find us on Facebook and Twitter. Good luck with your films, everyone.