Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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375.0000 MOTION PICTURES—Regulation 1529

Annotation 375.1036


(1) Generally

375.1036 Stock Shot Services. A taxpayer maintains a library of stock motion picture films for potential licensing and use to producers of motion pictures for commercial purposes, advertisers, etc. Producers contact the taxpayer with a request for a particular film or tape sequence. The taxpayer prepares a time-coded viewing cassette of the requested scenes. The viewing cassette is intended to be viewed only and is not commercially usable. A charge of $100 is made for the cassette. Sometimes the viewing cassette is returned to the taxpayer and sometimes it is not returned. Sometimes the viewing cassette is obtained from an outside source if the particular film or scene is not in its library.

After the producer selects the specific frames from the reviewing cassette, the producer orders a working copy of the selected frames on a specific size film or tape. After receiving the order, taxpayer obtains a working copy from the lab or vault location which stores the master film. After receiving and editing the working copy, the producer orders a final element, a 16 millimeter negative which the taxpayer obtains from the lab.

After completion of the producer's final cut, the taxpayer issues a one time only license to the producer. The copyright license is made by the taxpayer prior to the date that the qualified motion picture of the producer is exhibited or broadcast to its general audience.

The producer usually returns the final element, the 16 millimeter negative, to the taxpayer. Sometimes, although rarely, the producer physically incorporates or splices the final element duplicate film into the producer's master film.

The charge made by the taxpayer in connection with the furnishing of stock shots, whether from its own library or from others, qualifies as "qualified production services" and is nontaxable. The fact that the producer does not return the work print or the time-coded viewing cassette is immaterial. 9/19/90.