1. (a) The Qualified Expenditures shall be allowed as provided in sections 17053.85(b)(16) and 23685(b)(16) of the Revenue and Taxation Code.

   1. (1) Qualified Wages shall also include payments to a Qualified Entity to the extent their services are performed in California, including but not limited to Qualified Expenditures as defined in 17053.85(b)(13) and 23685(b)(13) of the Revenue and Taxation Code.

2. (b) The non-qualifying expenditures are as provided in sections 17053.85(b)(18)(B) and 23685(b)(18)(B) of the Revenue and Taxation Code. The following expenses shall not be allowed as qualified expenditures:

   1. (1) State and Federal Income taxes.
   2. (2) Certified Public Accountant Expenses for the report required in section 5506.
   3. (3) Expenditures for services performed outside the state of California are not considered qualified expenditures e.g., digital visual effects work which is physically performed out-of-state.
   4. (4) Expenditures for the exhibition of the Qualified Motion Picture, including but not limited to digital cinema distribution copies and release prints.
   5. (5) Expenditures incurred 30 days after the creation of the final elements, e.g. composite answer print, air master, digital cinema files.

Note: Authority cited: Sections 17053.85(e) and 23685(e), Revenue and Taxation Code; and Section 11152, Government Code. Reference: Sections 17053.85 and 23685, Revenue and Taxation Code; and Section 14998.1, Government Code.

History

1. New section filed 5-29-2009 as an emergency; operative 5-29-2009 (Register 2009, No. 22). A Certificate of Compliance must be transmitted to OAL by 11-25-2009 or emergency language will be repealed by operation of law on the following day.

2. Editorial correction of History 1 (Register 2009, No. 47).

3. New section refiled 11-19-2009; operative 11-19-2009 (Register 2009, No. 47). A Certificate of Compliance must be transmitted to OAL by 2-17-2010 or emergency language will be repealed by operation of law on the following day.

4. Certificate of Compliance as to 11-19-2009 order transmitted to OAL 2-3-2010; disapproved by OAL on 3-18-2010 and order of repeal as to 11-19-2009 order filed on 3-19-2010 (Register 2010, No. 12).

5. New section refiled 3-18-2010 as an emergency; operative 3-18-2010 (Register 2010, No. 12). A Certificate of Compliance must be transmitted to OAL by 6-16-2010 or emergency language will be repealed by operation of law on the following day.

6. Certificate of Compliance as to 3-18-2010 order, including amendment of section, transmitted to OAL 4-15-2010 and filed 5-19-2010 (Register 2010, No. 21).