Michael David Karlin
Nigro Karlin Segal Feldstein & Bolno, LLC

AR_MichaelKarlin_Advisor.jpgFor more than 30 years, Michael D. Karlin and his firm NKSFB have been pioneers and leaders in entertainment industry management and accounting.

Michael Karlin is a founding partner of entertainment management and accounting powerhouse NKSFB, along with co-founders Fred Nigro and Mickey Segal (also a 2016 nominee). He is responsible for managing the business and financial affairs of the firm\’92s high income and high net worth clients across the entertainment industry.

\’93We represent independent producers, executives, directors and talent in the television and motion picture industry,\’94 Karlin notes. \’93We have a significant music practice representing performing artists, songwriters, producers and executives in the music business. And we have a professional sports practice which represents professional athletes at every stage of their career, including many clients that become successful broadcasters.\’94

Karlin was one of three nominees selected by the CalCPA membership for the 2016 Entertainment Accountant of the Year honor (along with fellow NKSFB founder Mark Segal and entertainment auditor Steve Stills). The final selection for this top honor was made by a CalCPA special awards committee and announced at the 2016 Entertainment Industry Conference on Wednesday, June 15, at the Beverly Hills Wilshire Hotel.

Rapid changes in taxation, technology and globalization in entertainment were major themes of the 2016 Entertainment Industry conference. Karlin, a successful, decades-long veteran of the fast-changing entertainment world, added his own valuable insights into today\’92s entertainment challenges.

Karlin: Revenue Streams Are Changing

\’93Basically, there\’92s a changing landscape in the entertainment industry caused by the distribution of content via the internet,\’94 Karlin notes. \’93Deals are completely different today and the economics of deals are completely different than they were a decade ago. You need to be knowledgeable about the different technologies, the different distribution platforms and the resulting economics.

\’93For example, if you represent a film producer who has a participation in a film\’97and of course participations vary widely by their definition\’97we\’92re seeing a declining DVD and physical goods market that\’92s being replaced with downloading and streaming video-on- demand. Generally the amount paid to the producer per download or streaming could be substantially less \’85 unless you\’92re fortunate enough to represent superstar talent, your clients are working a lot harder for less.\’94

Karlin: Managing Worldwide Talent and Taxes 

Entertainment-accountant-of-the-year-award.jpgKarlin also offered his insights on the impact of globalization on management and accounting for entertainment talent.

\’93When you\’92re representing international talent performing in the United States, you have to be intimately familiar with the residency rules because these clients can unknowingly become a U.S. tax resident just by virtue of the time spent in the United States. If they\’92re a Green Card holder, there\’92s a presumption that they\’92re a U.S. tax resident. The United States, unlike any other country, taxes worldwide income.\’94

Karlin also saw new challenges in representing U.S. talent working internationally.

\’93There are much tighter compliance requirements. Foreign jurisdictions have stepped up the compliance because they realize they were missing opportunities. Now we\’92re seeing more and more foreign territories having active tax compliance requirements. Many times you have to consider filing in advance for tax mitigation.\’94

Karlin: The Deal Is a Big Deal

With the growing complexity of the entertainment landscape, the structuring of entertainment deals are now a vital focus for management and accounting, according to Karlin.

\’93Deals are much more complex today and there\’92s much more at stake financially, which means that you must be involved in the very earliest stage of the deal. You need to be in touch with your clients\’92 teams of advisers, including their entertainment attorneys, corporate counsel, managers and agents. You need to learn about deals when they are initially discussed, and help plan how to structure them\’97for instance, separating activities into separate entities to be sure your client is protected from liability to the greatest extent possible all while ensuring that they are paying the least amount of income taxes. That\’92s what we do.

\’93It\’92s a fascinating industry, ever-changing. You need to constantly stay on top of changes.\’94 But Karlin cautions, \’93Unless you know this area, be careful taking it on. Unless you handle a core amount of this type of work, you could miss something just by lack of familiarity. That might the biggest exposure someone might have if they\’92re not an entertainment firm.\’94