NAC360.855. Calculation of amount of transferable tax credits: Qualified expenditures and production costs eligible to serve as basis for calculation.

     1. For the purpose of calculating the amount of transferable tax credits available to an eligible producer pursuant to NRS 360.7591 to 360.7594, inclusive, except as otherwise provided in subsection 3, qualified expenditures and production costs that may serve as a basis for transferable tax credits must:

     (a) Be expenditures made on or after the date on which the eligible producer submits an application for a certificate of eligibility pursuant to paragraph (a) of subsection 2 of NAC 360.830;

     (b) Be customary and reasonable;

     (c) Relate to a category of qualified expenditures and costs listed in subsection 2; and

     (d) Be:

          (1) Purchases of tangible personal property or services from a Nevada business.

          (2) The payroll for Nevada residents or other personnel who provided services in this State, as calculated pursuant to NAC 360.860 and included in the calculation of the amount of transferable tax credits in accordance with NRS 360.7591 to 360.7594, inclusive.

          (3) Fees paid to a producer, as included in the calculation of the amount of transferable tax credits in accordance with subsection 3 of NRS 360.7594.

     2. Except as otherwise provided in this section and NRS 360.7591, expenditures or costs may serve as a basis for calculating the amount of transferable tax credits issued pursuant to NRS 360.759 only if the expenditure or cost relates to:

     (a) Set construction and operation.

     (b) Wardrobe and makeup.

     (c) Photography, sound and lighting.

     (d) Filming, film processing and film editing.

     (e) The rental or leasing of facilities, equipment and vehicles.

     (f) Food and lodging.

     (g) Editing, sound mixing, special effects, visual effects and other postproduction services.

     (h) The design, construction, improvement or repair of property, infrastructure, equipment or a production or postproduction facility.

     (i) State and local government taxes to the extent not included as part of another cost or expenditure included in the calculation of the amount of transferable tax credits pursuant to this section and NRS 360.7591 to 360.7594, inclusive.

     (j) Commercial airfare if purchased through a Nevada travel agency or travel company for travel that is directly attributable to the qualified production.

     (k) Insurance coverage and bonding if purchased through a Nevada insurance agency, broker or bonding agent.

     (l) The design and development of art assets for interactive entertainment, including, without limitation, concept art, background art, character models and sprites.

     (m) The programming of software related to interactive entertainment, including, without limitation, codebases, netcode, development and modification of source code, development and adaptation of game engine software and game development tools.

     (n) Quality assurance for interactive entertainment, including, without limitation, testing and tracking software bugs.

     (o) Motion capture for interactive entertainment, including, without limitation, costs for motion capture software, performers and participants and motion capture facilities and costs related to incorporating motion capture data into an interactive entertainment product.

     (p) Any other direct costs of producing a qualified production, including preproduction and postproduction, in accordance with generally accepted industry practice.

     3. Expenditures and costs must not be included in the calculation of the amount of transferable tax credits pursuant to this section and NRS 360.7591 to 360.7594, inclusive, if, pursuant to NRS 360.7591 to 360.7594, inclusive, and NAC 360.800 to 360.865, inclusive, the expenditure or cost is not eligible to serve as a basis for transferable tax credits issued pursuant to NRS 360.759. Pursuant to paragraph (c) of subsection 2 of NRS 360.7591, an expenditure or cost is ineligible to serve as a basis for transferable tax credits if the Office determines that the expenditure or cost provides a pass-through benefit to a person who is not a Nevada resident.

     (Added to NAC by Office of Economic Dev. by R120-13, eff. 12-23-2013)