Tennessee is not one of the states that has been agressive in enacting transferrable film credits, but Tennessee did pass a film credit several years ago when the Miley Cyrus/Hannah Montana Movie was being produced that allows for a credit against Tennessee franchise and excise tax. Well ... that credit has now become the subject of a lawsuit in Davidson County Chancery Court involving the production of the movie "Losers Take All" (Losers pictured here).
The credit applies to production companies that incur "qualified production expenses." The taxpayer, Spies Production, had previously produced a movie, "Nothing But the Truth," and qualified for the credit. The Complaint goes into great detail about the interaction between Spies and the Department of Revenue, but despite the close collaboration, the credit for the second film was denied. It is unclear from the complaint why the credit was denied, but it will be interesting to see how this case is resolved as it will likely include equitable reliance theories in addition to the taxpayer's claim that it simply qualifies for the credit.
The Complaint can be found by clicking here. http://bit.ly/GNsbcn
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