New California film tax credit ‘NOT good’ for Sony, email says

When Gov. Jerry Brown signed a new film tax credit bill in September, many in Hollywood were ecstatic.

The measure triples funding for film tax credits to $330 million annually over five years, beginning in 2015.

“It is time to put Hollywood back in Hollywood and today we do that,” proclaimed Los Angeles Mayor Eric Garcetti at a signing ceremony.

But according to emails reviewed by the Los Angeles Times, released in one of the troves of documents in the Sony hack, executives at Sony Pictures Entertainment didn’t see the bill as cause for celebration.

In August, Keith Weaver, Sony’s executive vice president of worldwide government affairs, emailed several Sony executives -- including Michael Lynton, Amy Pascal and Doug Belgrad -- saying the tax credit is “NOT good for SPE.”

“While others may be jubilant, this program is deeply flawed and doesn’t allow SPE to use the program,” he wrote. “The program provides that the credits are off-set against California income tax liability and because we file taxes on a unitary basis with other Sony group companies and combined we’re in an overall loss position, there is no way to monetize the credits.”

In a separate follow-up email to Sony’s lawyer Leah Weil, Weaver said, however “there may be a programmatic loophole that allows us (through production services agreements) to monetize these credits.”

He assured Weil that they “are working on a strategy to secure an administrative tax ruling to give us certainty on the approach, as well as researching risk factors.”

Sony Pictures Entertainment is owned by Tokyo-based Sony Corp.

A representative of Sony Pictures was not immediately available for comment.

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