Boxoffice-November.19.1955

—
: November
T^uUc SeaU Rule Sale of Films to TV
Legislatures in 17 States
Set to Meet Next Year
No indications yet on local moves in favor
of bills detrimental to motion picture business,
says Jack Bryson, legislative contact for
MPAA, after a survey.
Seeks Ohio Censor Bill
For January Session
Joseph W. Bartunek iD., Cleveland), majority
leader of the state Senate, requests
Gov. Frank J. Lausche include the re-establishment
of film censorship among bills to be
considered by the special session of the Ohio
general assembly.
•
Arbitration Is Started
On Cinerama Dispute
Meetings under way in New York on breach
of contract claim of Cinerama, Inc., against
Stanley Warner; Cinerama claims SW did
not complete "Seven Wonders of the World,"
third film in its process, In time for August
release as required in contract.
•
Republic Pictures Using
French Anamorphic Lens
Supplied by a French company, says Herbert
J. Yates in London and is being used
for Zane Grey's "The Maverick Queen"; company
has 28 productions ready for release in
the next eight months.
Closed Circuit TV Shows
For Charity Tax Exempt
Internal Revenue Service ruling applies to
theatres hired for the purpose of showing
opera, drama and sporting events if the income
is applied solely to charity purposes.
•
John G. McCarthy Sells
Share in Film Company
Former vice-president of motion picture association,
which has been importing films
under the corporate name of United Motion
Picture Organization; is now owned by Richard
Davis.
*
20th-Fox Getting $1,000
Per Day From Oil Wells
Seven wells drilled on the studio lot by
Consolidated Oil Co. producing 3,000 barrels
daily and 6.000,000 cubic feet of natural gas;
royalty will go up when drilling costs have
been paid.
William J. Dipson Elected
Dipson Chain President
His father, Nikitas Dipson, who has been
president of the Batavia, N. Y., theatre circuit,
becomes chairman of the board; the
elder Dipson plans to leave for Oreece.
Taxable As Capital Gain
WASHINGTON — The Internal
Revenue
Service on Wednesday (16) issued a ruling
holding that film distributors can sell their
films to television outright and pay taxes
on the receipts at the more favorable longterm
capital gain rates.
The ruling was made on a request by a
distributor either planning to sell 200 films
to TV or one which has already made such a
sale. The Service does not reveal the names
of parties seeking rulings, however, and does
not indicate whether the ruling is asked in
advance of a transaction or its conclusion.
The ruling was: "Where a motion picture
producer, which distributes motion picture
films on a rental or lease basis, but does not
sell such films In the ordinary course of its
business, sells a quantity of its own fully depreciated
films in one unusual and isolated
transaction, the gain realized from the sale
is taxable as a long-term capital gain under
the provisions of section 1231 of the Internal
Revenue Code of 1954 ..."
There was one provision, however. There
must not be offsetting losses greater than the
gains from the sale. The Bureau explained
that the 200 films in the case in question are
not stock in trade, which would be sold during
the ordinary course of business or which
would properly be included in inventory if on
hand at the close of the taxable year.
Company Tax Experts
Studying Ruling
NEW YORK—Major company tax experts
began studying the Internal Revenue Service
capital gains ruling Thursday (17). They
were not willing to be quoted at that early
date but their immediate reaction was that
to take advantage of the ruling they would
have to give up copyright ownership through
outright sale instead of lease, and that they
did not want to do.
All of those talked to disclaimed knowledge
of the identity of the company upon
whose application the ruling was made. The
Bureau referred to it only as "X Pictures
Corp.," and gave the total of its old films
released originally during 1931 to 1946—as 200.
It was noted that even before General
Teleradio took over RKO. a survey was begun
of the uses to which a larger backlog of old
RKO films could be put. It was also recalled
that companies including Lippert have
.sold to television, and that Spyros P. Skouras,
president of 20th Century-Fox, recently said
—apparently humorously—he wouldn't consider
any sale unless $50,000,000 was involved.
Company lawyers have been seeking a treasury
ruling for some time. During the summer.
Wall Street predicted that a ruling was
on the way. Financial circles thought it
might mean a bonanza for the companies.
As to the matter of outright sale, one company
copyright authority noted that some
old films possess remake values far in excess
of any sales value to television. For instance,
David O. Selznick has just reported
he will remake "A Farewell to Arms," a highly
successful film 20 years ago.
"The basic pointr' the copyright man said,
"is the necessity for disposal of all rights to
obtain capital gains privileges. That we are
loath to do. Then, too, it is apparent that if
Asks Skouras to
Call
Conference of Presidents
Milwaukee—Ben Marcus, former president
of National Allied, has proposed to
Spyros Skouras, president of 20th-Fox,
that a meeting; of all distribution company
presidents be called to "sit down and
thoroughly analyze the merits" of exhibitor
complaints on trade practices. Marcus
made public a letter he wrote to
Skouras making this suggestion, following
the appearance of the 20th-Fox executive
at last week's .\llied convention.
In a top level conference, the presidents
should agree to eliminate the
troublesome problems on a national basis.
"I agree with you that what we ask is so
little that there is no reason for them
to deny our requests, as it would ultimately
result to their financial benefit
more so than to exhibition."
Marcus paid tribute to Skouras for his
courage in coming to the convention "in
light of the events that took place
this last summer." He said many of the
actions taken at the convention would
have been unnecessary had the presidents
of the companies been willing "to listen
to our problems and rectify the complaints
or requests made by us. You,
yourself, told us at our meeting with you
that what we asked was very little and
that we should have asked for more."
we should make a practice of selling old films
to television and claiming capital gains rights,
the treasury would rule the revenue had become
ordinary income."
He was surprised that the government requires
outright sales, as reported, and said
the point needed clarification. He believed
it could still be possible to get capital gains
advantages while retaining motion picture
leasing and remake rights. If that wasn't
the case, he said, the government has changed
its position.
"The courts have conceded," he said, "that
a copyright can be divided into different
parts."
He mentioned the sale to 20th Century-
Fox by Kathleen Winsor, author, of the
rights to her novel, "Forever Amber." He said
it was his understanding the government had
held that she could divide the copyright
between television and theatrical uses.
"That is one reason," he said, "why I think
the companies can sell television rights while
still retaining theatrical rights." Contracts
signed by distributors and producers vary in
content. Some call for the return of the
producer of copyrights after a certain period
such as ten years. Where a distributor has
helped with the financing of a film, he sometimes
has outright ownership. Many contracts
specify television rights. So a distributor
selling a batch of films to TV and
claiming capital gains privileges would have
to study the contract on each film. The government
undoubtedly would do the same.
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BOXOFFICE
:
18. 1955