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California’s Film Tax Credit vs the California Competes Tax Credit and the AMT

The California Legislature recently passed AB 1173 enabling recipients of the film production tax credit to reduce their tentative minimum tax for tax years starting in 2011 with the credit. Clearly the Legislature recognized that a credit which is unable to reduce TMT is severely limited in its usefulness.

The BOE confirmed in the 2009 NASSCO case that Enterprise Zone credits could reduce AMT.

The two new tax credits created to replace the Enterprise Zone, however, have been crafted so that the credits may not reduce TMT. According to the FTB’s FAQs, neither the negotiate credit fund, or “California Competes Credit,” nor the “New Employment Credit” are able to reduce tax below tentative minimum tax.

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