1. 1 DIGITAL INTERACTIVE MEDIA Wednesday, October 28, 2009

2. Background

3. 3  The incentive program was created in 2005 by law RS 47:6022 aka the Louisiana Digital Media Act. The original program was to provide an incentive over six years on the development of digital interactive media products in the state of Louisiana. This program was to sunset by January 1, 2010.  This past session the program’s sunset was removed, the definitions were changed, the incentives were increased, and the administration of the program was revised. This past legislative session has left us with a completely different program to that of the one passed in 2005. Today, we will talk about our new program.

4. Agenda

5. 5  What is the program?

6. 6  What is digital interactive media?

7. 7  What is the program?  What is digital interactive media?  What isn’t digital interactive media?

8. 8  What is the program?  What is digital interactive media?  What isn’t digital interactive media?  Incentive and its characteristics

9. 9  What is the program?  What is digital interactive media?  What isn’t digital interactive media?  Incentive and its characteristics  Summary

10. What is the program?

11. 11 The program is an incentive for the development of digital interactive media in the state of Louisiana

12. What is digital interactive media?

13. 13 By Law:

14. 14 By Law: "Digital interactive media" means products or platforms that are intended for commercial production, use, or distribution; that contain at least two of the following types of data: text, sound, fixed images, animated images, video, or 3D geometry; and that have all of the following three characteristics:  "Digital" means a system that uses discrete (discontinuous) values ordinarily symbolized numerically to represent information for input, processing, transmission, and storage. A digital system would be contrasted with an "analog" system, which uses a continuous range of values to represent information. The term "digital" includes, but is not limited to information input, processed, transmitted and stored via the Internet.  "Interactive" means a digital media system for inputting, processing, transmitting, or storing information or data in which users of the system are able to respond to the digital media system by inputting, transmitting, processing, or storing information or data in response to the information or data provided to them through the digital media system. "Digital media system" means communications delivered via electronic energy where the information stored, transmitted, or received is in digital form.  "Media" means communication tools used to store, transmit, distribute, and deliver information and data. The term "media" includes methods and mechanisms for information distribution through, but not limited to distributed networks, such as the Internet, and through compact disc, CD-ROM, various types of DVD, and other removable storage drives and devices.

15. 15 EXAMPLES

16. 16 Computer / Video Games

17. 17 Web Applications

18. 18 Mobile Applications

19. 19 Social Media Web Platforms

20. 20 Office Suites

21. 21  digital interactive media

22. 22  digital interactive media =

23. 23  digital interactive media = application software

24. 24  digital interactive media = application software  The program is an incentive for the development of digital interactive media in the state of Louisiana

25. 25  digital interactive media = application software  The program is an incentive for the development of digital interactive media in the state of Louisiana  The program is an incentive for the development of application software in the state of Louisiana

26. What isn’t digital interactive media?

27. 27 1) Software development primarily designed and developed for institutional, private, or internal purposes.

28. 28 1) Software development primarily designed and developed for institutional, private, or internal purposes. 2) Largely static Internet sites designed to provide information about a person, business, company, or firm.

29. 29 1) Software development primarily designed and developed for institutional, private, or internal purposes. 2) Largely static Internet sites designed to provide information about a person, business, company, or firm. 3) Products regulated under the Louisiana Gaming Control Law

30. 30 1) Software development primarily designed and developed for institutional, private, or internal purposes. 2) Largely static Internet sites designed to provide information about a person, business, company, or firm. 3) Products regulated under the Louisiana Gaming Control Law 4) Not necessarily all digital media products such as digitally recorded music, film, or animation are applicable.

31. Incentive and its characteristics

32. 32 What is the Incentive?

33. 33 What is the Incentive?  35% tax credit on Louisiana residents hired as labor

34. 34 What is the Incentive?  35% tax credit on Louisiana residents hired as labor  25% tax credit on all other development expenses that occurred physically in Louisiana.

35. 35 What is the Incentive?  35% tax credit on Louisiana residents hired as labor  25% tax credit on all other development expenses that occurred physically in Louisiana.  No limit

36. 36 What is the Incentive?  35% tax credit on Louisiana residents hired as labor  25% tax credit on all other development expenses that occurred physically in Louisiana.  No limit  No minimum investment or threshold

37. 37 How does this work?

38. 38 How does this work?  Let’s say a web company X who is developing its new web application called AWESOME in Louisiana.

39. 39 How does this work?  Let’s say a web company X who is developing its new web application called AWESOME in Louisiana.  The the development for the web application software AWESOME is going to cost the company $ 75,000 for Louisiana labor and $25,000.00 for all of its other costs that occurred physically in Louisiana.

40. 40 How does this work?  Let’s say a web company X who is developing its new web application called AWESOME in Louisiana.  The the development for the web application software AWESOME is going to cost the company $ 75,000 for Louisiana labor and $25,000.00 for all of its other costs that occurred physically in Louisiana.  In total the company will spend $100,000.00 in Louisiana.

41. 41 If the company were to receive tax credits, how much are they going to receive?

42. 42 If the company were to receive tax credits, how much are they going to receive?.35*(Louisiana Labor Costs) +.25*(Other Development Costs) = Tax Credits

43. 43 If the company were to receive tax credits, how much are they going to receive?.35*(Louisiana Labor Costs) +.25*(Other Development Costs) = Tax Credits.35*($75,000) +.25*(25,000) = Tax Credits

44. 44 If the company were to receive tax credits, how much are they going to receive?.35*(Louisiana Labor Costs) +.25*(Other Development Costs) = Tax Credits.35*($75,000) +.25*(25,000) = Tax Credits $26,250 + $6,250 = Tax Credits

45. 45 If the company were to receive tax credits, how much are they going to receive?.35*(Louisiana Labor Costs) +.25*(Other Development Costs) = Tax Credits.35*($75,000) +.25*(25,000) = Tax Credits $26,250 + $6,250 = Tax Credits $32,500 = Tax Credits

46. 46 Because Company X did the $100,000 development of its web application software AWESOME in Louisiana the company will receive $32,500.00 in tax credits

47. 47 What can I do with tax credits?

48. 48 What can I do with tax credits? Tax Liability:

49. 49 What can I do with tax credits? Tax Liability: Use against tax liability

50. 50 What can I do with tax credits? Tax Liability: Use against tax liability No Tax Liability:

51. 51 What can I do with tax credits? Tax Liability: Use against tax liability No Tax Liability: Hold or sell (aka transfer) them

52. 52 How does this work?

53. 53 How does this work?  Let’s go back to Company X that received $32,500.00 in tax credits from developing its web application software AWESOME.

54. 54 How does this work?  Let’s go back to Company X that received $32,500.00 in tax credits from developing its web application software AWESOME.  Company X does not have any tax liability and does not wish to hold its tax credits

55. 55 How does this work?  Let’s go back to Company X that received $32,500.00 in tax credits from developing its web application software AWESOME.  Company X does not have any tax liability and does not wish to hold its tax credits  Company X finds Company Y who wishes to buy them.

56. 56 How does this work?  Let’s go back to Company X that received $32,500.00 in tax credits from developing its web application software AWESOME.  Company X does not have any tax liability and does not wish to hold its tax credits  Company X finds Company Y who wishes to buy them.  Company X sells the tax credits for $30,000.00 to Company Y.

57. 57  Company X has just earned $30,000, which it can now use for the marketing campaign of its new web application software AWESOME.

58. Summary

59. 59  The Digital Interactive Media Program is an incentive for the development of application software in Louisiana

60. 60  The Digital Interactive Media Program is an incentive for the development of application software in Louisiana  35% tax credit on Louisiana labor and 25% tax credit on all other costs

61. 61  The Digital Interactive Media Program is an incentive for the development of application software in Louisiana  35% tax credit on Louisiana labor and 25% tax credit on all other costs  No limit on the tax credits received

62. 62  The Digital Interactive Media Program is an incentive for the development of application software in Louisiana  35% tax credit on Louisiana labor and 25% tax credit on all other costs  No limit on the tax credits received  No minimum investment required

63. 63  The Digital Interactive Media Program is an incentive for the development of application software in Louisiana  35% tax credit on Louisiana labor and 25% tax credit on all other costs  No limit on the tax credits received  No minimum investment required  Tax Credit can be held or sold

64. 64 OpportunityLouisiana.com