IRS Section 181 Extension By President Obama Pushes Alternative Investments In Film As Best Opportunities Of 2011

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President Barack Obama's New Federal Tax Law which extends IRS Section 181 is a blessing for affluent high net worth individual investors and corporations who wanted to utilize Federal IRS Section 181 of the American Jobs Creations Act to invest in film ,movies, media & entertainment as a strategic investment hedge as part of their overall investment portfolio.

President Barack Obama's New Federal Tax Law which extends IRS Section 181 is a blessing for affluent high net worth individual investors and corporations who wanted to utilize Federal IRS Section 181 of the American Jobs Creations Act to invest in film ,movies, media & entertainment as a strategic investment hedge as part of their overall investment portfolio.

Apart from high net worth investors such as Steven Rales (Danaher), Jeff Skoll (Ebay), Larry Ellison (Oracle), Len Blavatnik, Fred Smith (Fedex), Norman Waitt, the Co-Founder of Gateway Computers, , Marc Turtletaub of The Money Store, Sidney Kimmel Of Jones Apparel Group, Minnesota Twins owner Bill Pohlad, the New York Times recently did a large article on investing in film covering the many different investors looking at Hollywood http://www.nytimes.com/2010/11/15/business/media/1... that are coming from different backgrounds including oil & gas executives, real estate entrepreneurs, CEO's of companies, hedge fund managers, and others that understand film investment as a non-correlated asset class.

"An individual or company who makes an investment into Section 181 qualified film or group of films can take a 100% deduction of their investment against their passive income as a individual, and, 100% deduction of their investment against their ordinary income as a corporation in the year their investment was made", states Yuri Rutman, CEO of Noci http://www.noci.com which structures and advises on risk minimized film financing for investors.

The American Jobs Creation Act Of 2004, the 2004 enactment of Section 181 of the Internal Revenue Code of 1986 (the "Code") marked an unprecedented change in U.S. policy toward the phenomenon known as "Runaway Production".

Runaway Production refers to a film or television production that leaves one state or country to be filmed in another purely for economic reasons. This movement occurs because producers tend to film in the location where they can minimize production costs through tax incentives, cheaper labor.

Over the years, Canada has been the greatest beneficiary of U.S. runaway productions (according to some reports, Canada has claimed up to 80% of the U.S. runaways, generating an economic impact of $10.3 billion in production output in 1998 alone).

Section 181 permits a 100% deduction for the cost of certain audio-visual works, regardless of what media they are destined for (e.g., theatrical, television, DVD, etc.).

Rutman's Chicago based company is setting the stage in educating interested investors, family offices, money managers, financial advisers, fund of funds, hedge fund managers, and private equity groups on why investing in the film business is really an investment into a manufacturing and distribution company

"What is great about IRS Section 181 is that it tells investors that film investing is not a sexy vehicle to mingle with the stars", states Rutman. "Investing in film is really an investment into a manufacturing industry that has short and long term value in terms of tax benefits, global tax credits that are monetized as cash and flow to investors, job creation, multiple-revenue streams, and varying degrees of exit strategies. If you combine the different incentives, cash rebates, leverage some pre-sales on large films, you can see a 50-100% ROI on your investment before actual revenues", Rutman adds".

Recently, Fortress Investments, one of the biggest private equity groups bought out the initial investors of Legendary Pictures which may have included Honeywell Pension Funds, MC Ventures, Arbry Partners, and others.

"Its not just the dentist or plastic surgeon looking for a vanity investment", states Rutman. "When self made billionaires like Fred Smith of FEDEX or hedge funds like Elliott Associates are investing in films, the question that every investor needs to ask is 'why'?"

"What we are also scaling and educating investors on, that an investment in film is risky if the pipeline for distribution is a gamble", "Rutman continues. "In our model, our equity reserve guarantees a theatrical release whether its on 100 screens or 3000 screens which give investors a higher level of transparency in revenues".

There is a very privileged and sophisticated way of financially participating in a basket of commercial films, which unlike a mutual fund, REIT, hedge fund, oil & gas investment, or other correlated asset class, can in certain instances provide a 60-100% ROI prior to revenues that has full transparency and has zero quantitative, exotic, or other confusing financial models that have in the last few years proven to be more risk than reward.

And with the growing demand of 3D Cinema, the costs of theatrical distribution coming down, DVD markets healthy, global Video On Demand rising, mobile technology, utilizing specialized social media and word of mouth marketing, and long term library valuation and multi-tier ancillary revenues, Noci Pictures has developed a very innovative business model and financial product that is scalable to both smaller investors and large institutional capital.

"I don't know of any other alternative investment that can offer tax incentives, multiple exit strategies, as well as giving back to the local economy, while being involved with the moviemaking process", states Rutman, the head of Noci Pictures. " I don't even know of any business that someone can start where they know they will receive an exact ROI before they see any profits".

"I am also surprised how many investors, hedge funds, VC, tax planners, CPA's, tax attorneys, public and private companies have no clue about these benefits", Rutman adds. "Federal Preservation, New Markets Tax Credits, etc was the usual route for tax credit planning or alternative investments , but film production incentives offer more premium and equity upside.

"I think what investors are finally starting to realize is that investing in a movie company or film fund is like investing in a mutual fund", states Rutman "Each film takes a life on its own as a standalone company but the difference is unlike hedge funds, mutual funds, or other alternatives, there is no correlation to whether the S&P's, stocks, or oil prices are going up and down. Plus our business model addresses the one key missing link when it comes to investing in film and that is theatrical distribution".