BEST TAX RELIEF ATTORNEY

A quiet trend has been emerging as billionaires and other high net worth Angel Investors and Family Offices from Wall Street To Silicon Valley To the Middle East have been parking their money into Hollywood.

Larry Ellison Of Oracle, Paul Allen Of Microsoft, Steven Rales, Fred Smith of Federal Express, Norman Waitt, the Co-Founder of Gateway Computers, Jeff Skoll Of Ebay, Marc Turtletaub of The Money Store, Roger Marino Of EMC Corp, Sidney Kimmel Of Jones Apparel Group, Minnesota Twins owner Bill Pohlad; Real Estate Developers Tom Rosenberg and Bob Yari, and, financiers Sheikh Waleed Al Ibrahim and Philip Anschutz are all behind the finance of a lot of films that range from box office hits to Academy Award winners.

And the question remains “why?”

While the glamour of the movie business may be appealing to most, at the end of the day, it is still an unknown business that many try to gamble on, and only a handful come out as winners. The real key is to minimize risk, maximize profits, and offer a steadier stream of revenues than what other alternative investments may offer such as real estate, oil & gas, commodities, as well as risky hedge funds.

Well one Chicago/L.A. based media finance Company is taking a different approach in presenting its entertainment opportunities to the super rich as well as private equity groups. Instead of dazzling investors with smoke and mirror Monte Carlo simulation models that offer various IRR’s and scenarios based on unpredictable film revenues streams, it is offering an absolute return on investment using public tax incentives that in certain instances can guarantee 100% or more of invested capital prior to revenues.

Noci Pictures Entertainment is putting together a slate of films using an innovative hybrid public-private finance strategy aimed at investors who want to take a 100% Federal deduction against their ordinary income, get an additional 20-40% in state tax credits or cash rebates, have a hedge of revenues from 20-30 films, a possible exit IPO on the London AIM., as well as stimulating local economic development, and creating jobs, including for women and minorities. Oh, and the company’s team includes the former Vice Chairman Of A Major Film Studio.

Sound too good to be true?

“I don’t know of any other alternative investment that can offer tax incentives, multiple exit strategies, as well as giving back to the local economy, while being involved with the moviemaking process”, states Yuri Rutman, the head of Noci Pictures. “That would also add to the long line of recent film funds that have been structured with numerous hedge funds, private equity investors, corporate tax credit buyers, and institutions. Heck I don’t even know of any business that someone can start where they know they will receive an exact ROI before they see any profits”.

”I am also surprised how many investors, hedge funds, VC, tax planners, CPA’s, tax attorneys, public and private companies have no clue about these benefits”, Rutman adds. “Federal Preservation, New Markets Tax Credits, etc was the usual route for tax credit planning or alternative investments , but film production incentives offer a more liquid premium, equity, as well as little Hollywood adventure and schmoozing with movie stars.”

Rutman adds “Plus, I am reinventing ‘conscious’ film finance. A lot of competitor deals won’t be around in a few years because they didn’t do their homework. I want to be making movies when I am 90”.



By: yuri rutman

The State Of Michigan is offering a new 40% cash rebate of motion picture production which makes it the most aggressive program in the country. It is trying to send a message to hedge funds, private equity groups, money managers, family offices, tax attorneys, high net worth investors, tax credit buyers, New Markets Tax Credit investors, and other international investors on the risk minimization of entertainment finance by getting a 40% cash back on the cost of equity.

However, on top of the 40% cash rebates, investors may also utilize Section 181 to offset their 75% and in some instances 100% dollar for dollar on the cost of film finance, all before operations, distribution, and international revenues.

In the past two years many institutional investors such as such as CITIGROUP, Deutche Bank, JP Morgan, Morgan Stanley, Dresdner Kleinwort, GE Commercial Finance, ABRY Partners, AIG Direct Investments, Bank of America Capital Investors, Columbia Capital, Falcon Investment Advisors, and M/C Venture Partners are all involved with the finance of films.

Indiviudals who are financing films include Larry Ellison, Paul Allen, Steven Rales, Fred Smith, the CEO of Federal Express, Norman Waitt, the Co-Founder of Gateway Computers, Jeff Skoll Of Ebay, Marc Turtletaub of The Money Store, Roger Marino Of EMC Corp, Sidney Kimmel Of Jones Apparel Group, Minnesota Twins owner Bill Pohlad; Real Estate Developers Tom Rosenberg, Bob Yari; and, financiers Sheikh Waleed Al Ibrahim, Zeid Masri of SilverHaze Partners, Michael Singer, Mark Esses, David Larcher, Michael Goguen, Richard Landry, Michael Reilly, Rafael Fogel, and Philip Anschutz

The American Jobs Creation Act Of 2004, the 2004 enactment of Section 181 of the Internal Revenue Code of 1986 (the “Code”) marked an unprecedented change in U.S. policy toward the phenomenon known as “Runaway Production”.

Runaway Production refers to a film or television production that leaves one state or country to be filmed in another purely for economic reasons. This movement occurs because producers tend to film in the location where they can minimize production costs through tax incentives, cheaper labor.

Over the years, Canada has been the greatest beneficiary of U.S. runaway productions (according to some reports, Canada has claimed up to 80% of the U.S. runaways, generating an economic impact of $10.3 billion in production output in 1998 alone).

Section 181 represents the first time that the U.S. federal government has recognized this impact by passing tax legislation to actively combat the flight of film and television programming.

Section 181 permits a 100% write-off for the cost of certain audio-visual works, regardless of what media they are destined for (e.g., theatrical, television, DVD, etc.).

An individual or company who makes an investment into Section 181 qualified productions can take a 100% deduction of their investment against their passive income in the year their investment was made.

The deduction can be made against active income should the investment be made by or through a widely held C corporation. The law is in effect until December 31, 2008, therefore investments must be made before that date and the money invested into qualifying productions must be spent by then by the productions.

But since Section 181 also allows for all other debt costs which are usually associated with film finance, a $10 million dollar film, where only $3.5 million is equity, an investor can deduct $3.5 million dollars against the $10 million, especially if the latter is mezzanine or gap finance.

Plus, an additional 20%-40% in state tax credits or rebates can be generated back to the Investors, before revenues. And with the The State of Michigan offering a 40% cash rebate for making a movie there, which is the most aggressive in the country. That translates to an additional $4 million in rebates to an investor based on a $10 million dollar film.

With the current appetite for alternative investing, real estate, and hedge funds starting to crunch, the viability of having an investment guaranteed up to 75-100% before operations and revenues is something that should be reviewed and considered carefully as part of a new asset class and portfolio holdings of private equity groups, money and wealth managers, and high net worth individuals.



By: Yuri Rutman