HAR § 18-235-17-08 — Example 1: J3T Productions is a calendar year taxpayer and begins producing its film in the State on January 1, 2020

During the tax year, the production incurs qualified production costs totaling $75,000. Because the $200,000 qualified production costs threshold has not been met, J3T Productions does not qualify for the tax credit and cannot claim the tax credit. Example 2: J3T Productions produces four productions throughout the taxable year, with each production incurring qualified production costs of $75,000. For the entire taxable year, J3T Productions has incurred qualified production costs in excess of $200,000 for all productions. Because no individual production incurred qualified production costs of at least $200,000, J3T Productions cannot claim the credit. This is true even though J3T Productions incurred qualified production costs in excess of $200,000 in the aggregate during the taxable year. (c) If in one tax year a production does not meet the $200,000 qualified production costs threshold imposed by section 235-17(d)(2), HRS, but incurs qualified production costs in a subsequent tax year for the same production that when combined with qualified production costs in the previous tax year satisfy the $200,000 threshold, the taxpayer may claim the credit under section 235-17, HRS, for the production. To claim the credit, the taxpayer must submit a production report to the Hawaii film office as described in section 18-235-17-03(b). The Hawaii film office will issue a certificate to the taxpayer certifying the amount of the qualified production costs for the prior year. To properly claim the credit for the prior year, the taxpayer must amend its income tax return for that year and attach the certificate to its amended tax return, along with any other required forms. Example 1: Assume the same facts as Example 1 under subsection (b), except that in June of 2021, the same production incurs qualified production costs totaling $250,000. Total qualified production costs associated with the production now exceed $200,000. Because the production now has qualified production costs totaling at least $200,000, J3T Productions can file an amended return for 2020 taking into account the $75,000 in qualified production costs incurred during 2020; provided a timely amended return is filed within twelve months following the close of the taxable year for which the credit may be claimed. Example 2: Assume the same facts as Example 1 under subsection (b), except that in June of 2021, the same production incurs qualified production costs totaling $75,000. Total qualified production costs associated with the production total only $150,000. Because the $200,000 qualified production costs threshold has not been met, J3T Productions cannot claim the tax credit.