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Fi32. How do the Film Office and Treasury determine whether a company is a proper applicant for the film production credit?
The film production credit statute requires that the applicant be an "eligible production company." MCL 208.1455(12)(d). The statute defines an "eligible production company" as the "entity in the business of producing qualified productions ..." In other words, with respect to a particular production project it is the entity in charge of making or producing the overall film, video game or other digital media project. As a practical matter, this concept of overall control means that the applicant must have ownership of, and/or legal control over, all of the intellectual property and other rights necessary to complete the production in its entirety, and convert the intellectual property into a finished, concrete media product ready for distribution or exhibition. An applicant with less than overall control over the project is not an "eligible production company" eligible for the credit.
For motion pictures, television series, documentary television, and similar productions, a production company that has been engaged to produce a project pursuant to a "work for hire" type contract is a vendor of the company engaging the "work for hire," and therefore would not be an eligible production company. Production services companies are generally considered vendors for the same reason. In these situations, the company contracting for the "work for hire" likely owns or controls all of the necessary rights to make the overall production, and would be the "eligible production company." For video games, the "eligible production company" with respect to a particular video game project is generally the video game publisher, and not the external development company that has been hired by the publisher to develop the game.
Schematic of Possible Relationship for Development of Television Series
Schematic of Possible Multi-Tiered Relationship for Video Game Development