The Art of Film Funding
Discover the secrets to funding and creating successful indie films with The Art of Film Funding Podcast. Join Carole Dean, President of From the Heart Productions and author of The Art of Film Funding, and Heather Lenz, director of the award-winning documentary Kusama-Infinity, as they chat with top film industry pros. Get practical insider tips on crowdfunding, pitching, saving on budgets, marketing, hybrid distribution, and the latest in A.I. filmmaking. Whether you’re funding your first project or navigating new trends, this podcast has everything you need to succeed. Subscribe and let’s get your film funded!
The Art of Film Funding
Learn about Incentives in a new tax cut and jobs bill.
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SPEAKER_03Hi 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 leading film attorney who works for Olsen and Separitis LTB. He discusses legal issues, marketing and distribution of films, and has extensive experience in the entertainment industry on a worldwide basis. Corky regularly speaks on the business and legal aspects of feature film development, including tax incentives. And Carol, I understand Corky Kessler is a generous donor to your Roy Dean film grant, right?
SPEAKER_02Oh yes, Claire. He's been such a supporter all these years. Thank you, Corky.
SPEAKER_04Carol, it's my pleasure, and to both Claire and uh you, Carol, I want people who who are on this and hearing this to know how great an advocate you are for all of them, and how Carol, your foundation is there to help them, and and you are one of the most wonderful people in the film business.
SPEAKER_02Oh my gosh, Garky, thank you so much. What wonderful comments sincerely appreciate it. And you've been a donor to the grant for so long. We really thank you for that. So let's get started and tell us about this new tax bill that helps filmmakers.
SPEAKER_04Okay, uh this is my pleasure. And and by the way, your listeners, whoever they are, will be the first people to hear about this because I'm gonna unveil it at Sundance uh Sunday, Monday, and Tuesday. Um what happened is uh and I'm sure uh they know about Section 181 that uh that uh terminated at the end of 2017. I mean uh uh uh yeah. And there's I mean 16. And there was nothing in 2017 for the filmmakers to take advantage of as far as the incentives. But when uh when President Trump signed into law the um tax cut and jobs act that he signed into law in January, they replaced Section 181 with two new incentives, and they carried over just one aspect of 181. So let me tell you what the incentives are. Um now film, television, and theater were added to what's called bonus depreciations, and it's section 168. So bonus depreciations, so what that means is when a film is put in service in that year that it's put in service, and that means when it's first shown. And it doesn't say how long it has to be shown, it doesn't say at the present time if it has to be shown in a theater, or it could be shown on YouTube or or or socially shown, uh, but it has to be put in service. In the year that a film is first shown, at the end of that year, the investors get a hundred percent depreciation. That means it's a hundred percent loss. And uh keep in mind under 181 spending gave them that benefit. Now it's the film has to be released. So it's gonna be a field day for distributors because they're the ones that principally put the film out, but you in theory could rent a theater and charge to get in, and your film uh would be in service. Television, it's when the year it's aired, first aired, and theater, it's uh in the year of the opening night of the theater. So that gives the same advantages, but there's no upside limit. 181 you could only expense up to 15 or 20 million dollars. This has no limit. It could be a hundred million dollars. So there's no limit and there's no floor. Now, and it goes back, reverts back to start September of 2017. And it ends at the end of 2022. That's wonderful. All right. The the other aspect that was oh, but for this, still, the carryover of 181 is 75% still of your service wages in the film have to be performed and paid in the United States. 25% can be in any country that you want. So in theory, uh, let's say we have a $10 million movie, uh uh, we could spend $2,500,000 in service wages in Canada or in London and take advantage of their incentives also.
SPEAKER_02And they both both countries have incentives for public.
SPEAKER_04Uh Canada has a big incentive, and so and so does London. So does England. So I'm just giving examples. France has got a 25% incentive, the Dominican Republic has got a 25% incentive. So we can go to any place that we want and spend the 25% and still qualify for our incentive. Oh, this is great. Now, the second aspect of the original incentives was Section 199. And and Section 199 had to do with a discount in taxable income that came back to you. And it's for a lot of categories that are manufacturers, but it includes film and television. I don't know if it includes theater, but 199 says that you did say in the past that you got a 9% deduction on taxable income. So for example, if I returned a dollar of taxable income to you, you'd pay tax on 91 cents. In the new law, it's called 199 Capital A, and they give a 20% discount. Oh my goodness, that's wonderful. Taxable income. So if I return a dollar to you, you pay tax on eighty cents. But there are limitations on what you can do under that, and you need to make sure you talk to your accountant who who knows this, who can tell you what the limitations are. But for all practical pr uh purposes, it's twenty percent.
SPEAKER_02Okay. So this is for the the investor. So they give you a million dollars and they get a million dollars back, and uh so they there's twenty percent there, or two hundred thousand that they don't have to pay tax on.
SPEAKER_04Uh b uh uh but I think the maximum you can write off, I think. But you should check with your accountant is three hundred and fifty thousand dollars, but that's still a lot. Oh it is. Okay, so those are the two incentives. Uh yeah, so um the and I'm gonna I'm gonna to unveil that at uh Sundance. One I'm speaking on Sunday at the Black House, and it's called the Black House, it's where African American filmmakers go and congregate during Sundance. Okay. On Monday we host a big a big industry panel that I put together and uh we talk about legal and business pitfalls, screenplay through distribution, and that's at Utah Film Studio from 10 a.m. to twelve o'clock. Okay and y you need to sign up, but the registration the registration is closed, but if anyone that's listening to this does want to attend and is going to be there, um they should uh contact me by my cell, which is 312-925-2110. And then on Tuesday at Utah Film Studio from 9 30 to 1, I moderate two women in film panels. Wow and the topic that I'm gonna lead off it has to do with the Me Too and Time is Up issues.
SPEAKER_02Me Too and Time is Up issues. Wonderful.
SPEAKER_04Yeah, so we're gonna talk about that.
SPEAKER_02That'd be great. So that is 9 30 to 1 p.m. and that's on Tuesday, and that's at the same place, the Utah Film and on Sunday during Sundance is the women march.
SPEAKER_04Oh wonderful. So so if I have time, I'm gonna join the march.
SPEAKER_02Oh what fun that'll be. Oh, they'll love to have you.
SPEAKER_04So, um so uh so I host uh two parties Sunday night at Sundance, I host a Chicago food party, um uh a and I fly pizzas and hot dogs, and Mars sends all this candy there.
SPEAKER_02Oh, yeah, do you fly the food in from Chicago?
SPEAKER_04Uh-huh.
SPEAKER_02The pizza I bet it's outstanding.
SPEAKER_04Okay, and the hot dogs too from Chicago. And Mars, which is a Chicago company, sends all this candy.
SPEAKER_02Oh yeah, Mars Bar is wonderful.
SPEAKER_04Yeah, and then on Monday night I host a at uh at the ha same house that I rent, a big industry party that is catered that starts at 830, and we get about two hundred and fifty to three hundred people that come to the house.
SPEAKER_02Wonderful. So this is for anyone in the industry uh and filmmakers for documentaries and features.
SPEAKER_04Yeah, but they'd have to contact me. Right. Yeah. All right. Um and but but to to the people that are on this call that are gonna be at Sundance, please contact me at 312-9252110. And um uh uh uh uh Carol, you you're an amazing person, and the listeners should know that that your foundation is one of the cornerstones of helping filmmakers.
SPEAKER_02Oh, thank you, Corky. This our film grants are twenty-five years old now. It's a long time we've been doing this.
SPEAKER_04Yeah, I mean i it's an amazing uh thing. I a i and I'm gonna be talking at the Santa Fe Film Festival in February. And I'm gonna be talking in uh Nashville in March.
SPEAKER_02Oh, I've been to the Nashville before, and that is so much fun. They'll love you there. Nashville in March.
SPEAKER_04So so when I joined this firm, uh I I uh the the firm is an intellectual property law firm. That's all that our firm does. And uh i it's it's like copyright, it's trademarks, it's patents, it's litigation in those areas. So I brought my entertainment practice here and and I recruited two wonderful women to be part of my entertainment group here.
SPEAKER_02Oh good. How nice for them.
SPEAKER_04Well w well, I hope so. I mean they volunteered too. I sort of approached them, but they volunteered. And to tell you the truth, uh, some of my clients would rather deal with women than with me, so it works out well.
SPEAKER_02Well, women are very efficient, Gorky, and they get into the details and people love that.
SPEAKER_04Yes, so so what's going on?
SPEAKER_02Well, okay, this is exciting news. So um now it let's go back. Uh you said something when you were talking about uh the tax incentives, uh that you talk to your accountant about it. So it's really important that you are aligned with your accountant and that he better know uh about the new tax law, right? He should be up to date.
SPEAKER_04Yeah, more so as to the twenty percent the deduction in taxable income. Not necessarily for the uh bonus appreciation, but what everyone should understand, similar as 181, when 181 came out, when it originally came out under the original jobs act of of 2004, uh it had no rules or regulations until February of 2007. So there was nothing to guide it, it was like the wild, wild west. Okay there are no rules and regulations for the new one either. So right now the field of how to interpret things is wide open.
SPEAKER_02Is that good or bad? I don't know.
SPEAKER_04That's good. There could be a rule that tells you what put in service means. They could say it has to be in theaters, they could say it has to be in a certain number of theaters, they could say the form of release that has to be. Right now there's no definition of what release means. We know it has to be shown, and I don't think a festival would qualify, but in practicality until they say differently, I could rent a theater and I could show it in that theater and charge people a dollar or two dollars and the film is in service.
SPEAKER_02Yes, it's being seen. Exactly. Okay. And do you think this is going to create more income for filmmakers? You think that investors will like this new law?
SPEAKER_04Uh oh, y uh y well, why not? Look, if you have a way to put your film in service, be a distributor or yourself or on YouTube or AOL or Amazon or Netflix or any place, if you already know you can garner a put in service situation for your film, it's a no-brainer. You you you just tell your your investors they'll be whole in that year. They'll they'll have uh so so if I'm an investor and I put a million dollars into a film and the uh and I put it in in 2018, and the film gets released in 2019, at the end of that year I'll have a hundred percent loss.
SPEAKER_02That's really good. And then if you get money coming back in in 2021, that's income to you, but immediately.
SPEAKER_04And then you can subtract 20%, which is amazing.
SPEAKER_02Yes, great benefit. Well, do you you know this works for documentaries as well as yes, yes. Okay, because there's a lot of people now that are raising money and doing really great webisodes, and some of those webisodes are uh twenty thousand dollars uh uh uh one for one webisode, they do five, so they can be up to a hundred, two hundred thousand budget. I I wonder if that's any good for them.
SPEAKER_04Uh well look, how is it bad? Uh there's no limit. Okay, so let's take friends. Friends was fifteen million dollars per episode. Uh they could write off every episode of Friends in each year that the episode show.
SPEAKER_02Wow.
SPEAKER_04Let's say you you have a movie Pirates of the Caribbean. I I think it's gonna up to seventeen or eighteen. I have no idea. But if you did Pirates of the Caribbean and it was a hundred million dollar project, yes, the year that that movie gets released, at the end of the year it's a hundred percent loss.
SPEAKER_02Wow. So of course that's great. That is really a great incentive for people to invest in films. This is the thing that's happened for us.
SPEAKER_04I uh yeah, a a and all the investors get the same benefit. It doesn't matter whether they're active or passive in the film like 181 was, it doesn't matter, they're all grouped together.
SPEAKER_02All of them grouped together. Doesn't matter if they're active or passive. That's really important.
SPEAKER_04Uh yeah, so uh so we ha uh uh we have an army here of three people uh that can help filmmakers and uh the and again uh they should contact me if if they're gonna be at the Sundance or they want more information. And again, the best way to do it is my cell, 312-9252110. And um uh Carol and Claire, uh are there any questions? Do people send in questions?
SPEAKER_02Uh there may be on our website or on our Facebook page, excuse me, but we'll forward all that to you.
SPEAKER_04Right?
SPEAKER_02So this is what we need.
SPEAKER_04Yeah, uh uh uh and I leave for Sundance on Saturday, but but uh plus I'm there until Thursday. Um it's it's supposed to snow a lot there, so um hopefully it won't be a blizzard, but it's not supposed to be.
SPEAKER_03Yeah, Corky, I have to mention that uh here in in uh Houston where I am, uh we've we've had snow for the past couple of days.
SPEAKER_04Yeah, and I heard i i it's it's almost zero degrees in Nashville, which which is amazing.
SPEAKER_03Incredible, yes, so it's cold. Every everyone going to Sundance, please travel safely and and uh make sure you bring plenty of warm clothing. And um what is the main thing that uh that we would look for when you're at Sundance giving your talk?
SPEAKER_04Well um uh uh well so I'm talking uh three times. Um they should look for me to talk about with a panel legal and business pitfalls play through distribution. Uh in the women film panels we're gonna talk about intellectual property. In the panel that I do on Monday, the legal and business controls, we're gonna talk about also intellectual property and and various other things that that the people should know. And look uh all my topics uh they're free. So there's no reason that they shouldn't try and come. But Monday is closed up but if they want to come they should call me on myself. Tuesday women in film uh they should just come because there's no sign up Tuesday women in film just come all right we'll we'll post that that's good and that's the phone number was 312 nine two five two one one oh and Carol if you ever want me to talk to your group at any time I'm happy to do that.
SPEAKER_03Oh that sounds great we sincerely thank you all right well we wish you the very best of luck and thank you for all this information filmmakers really appreciate it you're the first people that have ever talked about you are the first to hear that we love being first thank you all right Claire and Carol thank you very much to you thank you always pleasure 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 filmmakers and comes highly recommended by From the Heart Productions. If you need music to help tell your story please contact him at davidrakeland 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.
SPEAKER_00Good luck with your films everyone's PCS time you know the drill pack research the new base get the kids in school because family supports family at American Public University we support military families with flexible affordable online education that lives with you. As a military spouse your tuition is the same as your partner at $250 for credit dollars American Public University education that moves with you. Learn more at apu.afus military
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