Louisiana Administrative Code
Title 61 - REVENUE AND TAXATION
Part I - Taxes Collected and Administered by the Secretary of Revenue
Chapter 67 - Louisiana Entertainment Industry Tax Credit Programs
Section I-6768 - Illustrative Examples of Production Expenses

1. salary expenses directly relating to the development of a state certified production, with position titles including but not limited to programmer, game designer, industrial designer, and quality assurance/tester When determining eligibility, LED will consider job title, job description, staff resumes and any other factors it deems most appropriate under the circumstances;

2. preproduction stage expenses such as design documents, mock-ups and prototypes;

3. testing software, source code development, patches, updates, sprites, three-dimensional models and level design:

4. costs associated with photography and sound synchronization, lighting and related services;

5. rental of Louisiana facilities and equipment, that are directly related to production. If production facility hosts both qualifying and non-qualifying work areas, rent should be pro rated accordingly;

6. purchase of prepackaged audio files, video files, photographic, or libraries;

7. purchase of license to use pre-recorded audio files, video or photographic files;

8. development costs associated with producing audio files and video files to be used in the production of the end product under development;

9. purchase of game engines or content management platforms produced for general sale.

1. salary expenses not directly related to the development of a state certified production, including but not limited to staff in the following departments: customer service, IT, clerical, sales and marketing, human resources, accounting, janitorial service. When determining eligibility, LED will consider job title, job description, staff resumes and any other factors it deems most appropriate under the circumstances;

2. salary expenses for C-level positions are not an eligible expenditure, unless applicant can demonstrate that services performed in Louisiana were directly related to the development of a state certified production. When determining eligibility, LED will consider size and nature of company, resumes and any other factors it deems most appropriate under the circumstances;

3. expenditures made prior to preproduction, such as research and development, workforce recruitment or intellectual property research;

4. expenditures for or related to marketing, promotion and distribution;

5. administrative, payroll, and management services which are not directly related to management of the state-certified production;

6. amounts that are later reimbursed by the state or any other governmental agency;

7. costs related to the transfer of tax credits;

8. amounts that are paid to persons or entities as a result of their participation in profits from the exploitation of the production;

9. application fee;

10. state or local taxes;

11. food, entertainment and lodging expenses;

12. cost of customization or custom development of a product is not an eligible production expense, unless the customization services are performed in Louisiana.

13. automobile expenditures such as mileage, purchase or maintenance costs;

14. parking fees;

15. furniture and fixture expenses;

16. digital content generated by the end user;

17. digital content comprised primarily of local news, events, weather, local market reports or public service content;

18. digital content expenses occurring after the state-certified productions commercial release;

19. audio/video content streamed through the internet or mobile platform is not an eligible production expense, unless it includes value added interactive functionality, as verified and approved by the office;

20. expenditures relating to the creation of standalone digital content simply transmitted through digital distribution methods, such as the original filming costs of a web based television series streamed through the internet;

21. maintenance services of existing software applications or products, generally performed by IT employees after commercial release, such as installation of security patches or modifications to debug or fix minor programming errors;

22. configuration services of existing software applications or products, generally performed by IT employees after commercial release, such as choosing from a number of defined options or modifying default capabilities to allow users different levels of access;

23. data migration services, generally performed by IT employees after commercial release, such as the transfer of data from one back up tape to another, or costs with upgrading to a new version of a database system;

24. online purchases. Production expenses must be taxable transactions made in Louisiana, from a source within the state to qualify. Unless purchased from a source within the state, online purchases do not qualify.

1. Gamemaster positions are considered hybrid positions, involving both programmer and customer service functions. LED establishes a customary ratio of 50 percent programmer duties to 50 percent customer service. Salary expenses may therefore qualify on an allocated basis, proportionate with proven programmer duties. When determining eligibility, LED will consider size and nature of company, resumes and any other factors it deems most appropriate under the circumstances.

2. Hard costs for component parts, licenses and equipment may not exceed labor costs. LED establishes a customary expense ratio of 20 percent equipment versus 80 percent labor costs. When determining eligibility, LED will consider number of jobs to be created, proposed cost of component parts, licenses and equipment, company history and any other factors it deems most appropriate under the circumstances.

3. Project management fees may be limited to 20 percent of base investment.

4. Where goods are provided by a related party, qualifying expenditures are limited to fair market value, which may be established through the related partys historic dealings with unrelated parties, or actual transactions between other unrelated parties, for substantially similar goods. The comparable transactions must be substantially similar, considering the type of goods, the geographic market, and other pertinent variables.

For Example: The production company has recently acquired the same type of goods in Louisiana at the same price from an unrelated third party. If FMV cannot be established, qualifying expenditures will be limited to the internal cost recovery rate, consisting of actual documented acquisition cost, plus ongoing maintenance and upgrade cost, divided by anticipated utilization over the real useful life.

5. Where services are provided by a related party, qualifying expenditures are limited to the actual compensation paid by the related party to its employee actually performing the service (including employer-paid benefits), allocated to the production on an hourly basis. Related party transactions must be supported by an audit and documentation as requested by LED, which may include (but is not limited to) third-party contracts, notarized affidavits, tax records, and cancelled checks.

6. Sub-contractor development labor is limited to the actual compensation paid by the sub-contractor to its employee actually performing the service (including employer-paid benefits), allocated to the production on an hourly basis. Applicants must provide detailed accounting and verification of sub-contractor expenditures, including submission of agreements reflecting the scope of services provided in Louisiana and upon request allow the state to audit the sub-contractors accounting records directly relating to any expenses claimed for tax credits.

7. Any expenses made on behalf of a state certified production, by an entity other than the applicant approved by LED and being claimed for tax credits (such as payments made by a sub-contractor) must be submitted with additional supporting documentation as requested by LED.