Does a story-driven live show qualify as a 'live dramatic or musical arts performance' under Tax Law 1115(x), making production-property purchases potentially exempt?

Plain-English summary

The petitioner produced and staged a live show -- a winter-themed, family-oriented, story-driven production -- at a 5,600-seat New York City theater, running at least five performances per week for about two consecutive months with a paid admission. The show tells a complete story (a boy's quest to bring snow back to the city) through music, lyrics, choreography, dialogue, puppetry, and scenery, with 16 titled musical numbers; acrobatics and juggling appear but are woven into the story. The producer asked whether its purchases and rentals of property and services used to produce and stage the show are exempt under Tax Law 1115(x).

The Office of Counsel concluded:

• The show is the right kind of performance. Section 1115(x) exempts property used directly and predominantly to produce live dramatic or musical arts performances in a qualifying theater (100+ fixed seats, at least five shows a week for two-plus weeks, same content, paid admission). The venue (5,600 seats) and the run met the structural tests.
• Not a "circus." The phrase "live dramatic or musical arts performances" excludes circuses, variety shows, and similar acts (20 NYCRR 527.10(d)(2)). Unlike the producer's earlier productions found to be circuses (TSB-A-99(25)S; TSB-A-98(1)S) -- where acrobatic/aerial acts predominated -- here the acrobatic and gymnastic elements support the story and choreography rather than being the focus. Like the ice skating in the Ice Capades, they're integrated with music, scenery, and lighting (Metromedia v. State Tax Commission). So the show qualifies as a live dramatic or musical arts performance.
• But the property exemption wasn't decided. The Department expressed no opinion on whether the specific property or services the producer bought or rented are exempt, because the petition didn't say what was purchased or how it was used. The 1115(x) exemption requires the property to be used directly and predominantly in the production, and that's a fact question the petition didn't support.

What this means for you

Theatrical and live-event producers

Qualifying for the 1115(x) production exemption is a two-step matter: (1) your show must be a genuine live dramatic or musical arts performance (not a circus/variety/ice show -- the test is whether acrobatic or spectacle elements serve a story or are the show), staged on the required schedule in a qualifying theater with paid admission; and (2) each specific item of property or service must be directly and predominantly used in producing the show. Getting a favorable ruling on the type of show doesn't by itself exempt your purchases -- document what you buy/rent and how it's used in the production.

Venues and vendors

The same item can be exempt for a qualifying dramatic/musical production and taxable elsewhere; the exemption rides on the use, and note that property permanently affixed to the building is excluded.

Common questions

Q: My arena show has some acrobatics -- can it still be a 'dramatic or musical arts performance'?
A: Yes, if the acrobatics support a sustained story/choreography rather than being the focus. If spectacle acts predominate, it's treated as a circus/variety show and doesn't qualify.

Q: Does qualifying as that kind of show exempt my equipment purchases?
A: Not automatically. You must also show each item is used directly and predominantly in producing the show -- a separate, fact-specific question.

Q: What schedule does 1115(x) require?
A: At least five performances a week for two-plus consecutive weeks, same content, with a paid admission, in a qualifying theater.

Citations and references

• Tax Law section 1105(a) (sales tax on tangible personal property)
• Tax Law section 1115(x) (exemption for property used in live dramatic/musical arts productions)
• Tax Law section 1105(f)(1) (admission charges to dramatic/musical arts performances)
• Tax Law section 1105(c)(2) (producing/fabricating property)
• Tax Law section 1105(c)(3) (installing/servicing property)
• 20 NYCRR section 527.10(d)(2) (live dramatic and musical arts performances)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2011.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a11_18s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-11(18)S
Sales Tax
May 23, 2011

Office of Counsel
Advisory Opinion Unit
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S101013B

The Department of Taxation and Finance received a Petition for Advisory Opinion from name
and address redacted. Petitioner asks whether its purchases and rentals of tangible personal property
and/or services used directly in the production and staging of its live performances of the show name
redacted at the WaMu Theater at Madison Square Garden in New York City are exempt from sales tax
under Tax Law section 1115(x).
We conclude that name redacted qualifies as a live dramatic or musical arts performance in a
theater as required by section 1115(x) but reach no conclusion on whether those purchases and rentals and
services are exempt from sales tax under Tax Law section 1115(x).
Facts
Petitioner produced and presented the live show name redacted over the course of three seasons
from 2007 through 2010 at Madison Square Garden's 5,600-seat WaMu Theater in New York City. The
winter-themed, family-oriented production ran for roughly two consecutive months each season, during
which performances were staged at least five times per week and were open to the general public for an
admission charge.
Name redacted represented a significant departure from the formula of prior productions
developed under the name redacted banner. Staged in a proscenium theater rather than name redacted
trademark "big-top" tent, the show was developed predominantly as a work of musical theater and geared
mainly toward children. One of the chief distinctions between name redacted and name redacted touring
big-top productions is name redacted focus on telling a complete story with a sustained plot line. Name
redacted tells the story of a young city-dwelling boy named name redacted who laments the absence of
snow, despite the city being in the grips of a cold winter. He thus sets off on a journey to find the reason
for this and to bring snow back to the city. Along the way, he meets a host of characters, including urban
street characters from the city, a group of dancing (puppet) sheepdogs, a chorus of singing lampposts, a
lost shaman, the Priestess of the North, and numerous other whimsical characters. The group's travels lead
Name redacted to the land of name redacted, a land without sunlight, where they encounter the People of
the North, and where name redacted and his entourage manage to restore sunlight, before flying home on
a giant bird whose wings create a snowstorm bringing snow back to the city.
This story of a boy's quest to find snow is advanced through a combination of music, narrative
lyrics, choreographed movement, spoken dialogue, miming, puppetry and constantly changing scenery.
The show's 16 distinct and titled musical numbers drive the action on stage, with virtually every activity
on the stage being punctuated by and/or choreographed to the live music. Many of the musical
compositions in the show feature live vocal performances with spoken or sung lyrics that serve to advance
the narrative. The songs are all original compositions, individually copyright protected through the

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performance rights organizations ASCAP (the American Society of Composers, Authors and Publishers)
and BMI (Broadcast Music, Inc.).
Although some of the scenes in name redacted feature elements often found in a traditional
"circus" (such as juggling and acrobatics), such acts are in nearly every case woven into larger
choreographed arrangements featuring the story's characters on stage simultaneously. The acrobatic acts
are themselves generally choreographed to synchronize directly with the musical compositions. Unlike
previous name redacted productions that showcase elaborate acrobatic and aerial acts such as daring highwire and trapeze stunts, the acrobatics in name redacted play only a supporting role. In fact, out of the 26
distinct scenes in name redacted, a minority have acrobatics, juggling, or other circus-type "acts" as their
primary focus. Most of the scenes are devoted to storytelling through choreography, movement, music,
lyrics, scenery, and dialogue. A detailed scene-by-scene breakdown was also included as Exhibit 1.
The choice of the WaMu Theater as a venue also reflects Petitioner's departure from prior name
redacted productions. The ceiling of the theater's proscenium stage measures only 22 feet high, making it
impossible to stage the type of aerial acrobatics (e.g. trapeze, highwire, etc.) featured in larger-scale
productions staged under name redacted 52-foot-high "big top" tent. name redacted was developed
specifically for the WaMu's much smaller stage as a recurring seasonal event. And the WaMu (formerly
the Theater at Madison Square Garden) Theater has been host to numerous other theatrical performances,
including productions of The Wizard of Oz, Madea's Big Happy Family, 101 Dalmations, and A
Christmas Carol. The WaMu has never hosted a circus.
A DVD containing a complete performance of name redacted at the WaMu Theater on
December 11, 2009, was included with this ruling request. Petitioner asserts that the video demonstrates
that name redacted has all the normal characteristics of a "play" one could see in any New York City
theater. The story is told through musical numbers, choreography, dancing, miming, acrobatics and
dialogue. It has a sustained plot, and but for acrobatic acts sprinkled throughout several of the scenes, it is
a basic Broadway musical. Nowhere is this clearer, Petitioner continues, than in the final scenes of the
play, set to the composition name redacted where all the characters join in a musical number featuring
singing, dancing, and even a customary curtain call for all the characters.
Analysis
Section 1105(a) of the Tax Law imposes the State’s sales tax on every retail sale of tangible
personal property. Article 29 of the Tax Law authorizes the imposition of local sales and compensating
use taxes. Section 1210(a)(1) authorizes every county outside New York City and every city, including
New York City, to impose sales and use taxes similar to the State’s sales and use taxes. Every county and
several cities, including New York City, impose the section 1210(a)(1)/1105/1110 sales and use taxes.
For all matters pertinent here, these county and city sales and use taxes (“local taxes”) are identical to
each other and to the State’s sales and use taxes. Among other things, that means the local taxes have the
same definitions and the same exemptions as the State’s taxes. The Commissioner’s Regulations
applicable to the State’s sales and use taxes apply with equal force and effect to the local taxes.
Tax Law section 1115(x)(1) exempts from sales and use taxes tangible personal property for use
or consumption directly and predominantly in production of live dramatic or musical arts performances in
a theater or other similar place of assembly (but not including a roof garden, cabaret or other similar
place), with a seating capacity of one hundred or more chairs that are rigidly anchored to the construction
or fixed in place so as to prevent movement in any direction, but only where it can be shown at the time
such tangible personal property is purchased that such performances are to be presented to the public in
such theater or other similar place on a regular basis of at least five performances per week for a period of

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at least two consecutive weeks, the content of each such performance shall be the same and a charge is or
is to be made for admission to the place where such performances occur. For purposes of the foregoing,
the term "place of assembly" means a place of assembly with a stage in which scenery and scenic
elements are used, as described in section 27-232 and subdivision (a) of section 27-255 of the
Administrative Code of the City of New York (as such section and subdivision existed on January 1,
1978), and for which an approved seating plan is required to be kept, as described in section 27-528 of the
City’s Administrative Code (as such section existed on January 1, 1978), whether or not such theater or
other similar place is located in New York City. Nothing in section 1115(x)(1) shall be construed to
exempt tangible personal property which is permanently affixed to, or becomes an integral component
part of, a structure, building, or real property. Section 1115(x)(2) exempts services described in
paragraph two or three of subdivision (c) of section eleven hundred five of this article when rendered with
respect to property exempt under section 1115(x)(1). Section 1105(c)(2) services consist of producing,
fabricating, processing, printing or imprinting tangible personal property, performed for a person who
directly or indirectly furnishes the tangible personal property, not purchased by that person for resale,
upon which those services are performed. Section 1105(c)(3) services consist of installing tangible
personal property, excluding a mobile home, or maintaining, servicing or repairing tangible personal
property, including a mobile home, not held for sale in the regular course of business, whether or not the
services are performed directly or by means of coin-operated equipment or by any other means, and
whether or not any tangible personal property is transferred in conjunction therewith.
The phrase “live dramatic or musical arts performances” as used in section 1115(x) must be read
in pari materia, or construed together, with the same phrase used in section 1105(f)(1), which provides an
exclusion from sales tax for admission charges to those kinds of performances. Tax regulations section
527.10(d)(2) provides that live dramatic and musical arts performances do not include variety shows,
magic shows, circuses, animal acts, ice shows, aquatic shows and similar performances.
From the information provided by the Petitioner, it appears that name redacted satisfied the
requirements in section 1115(x) that there were performances presented to the public on a regular basis
for at least five performances a week for a period of at least two consecutive weeks, with the content of
each performance being the same and a charge for admission made. Further, the WaMu Theater at
Madison Square Garden, with 5600 seats, qualifies as a theater.
We also conclude that name redacted qualifies as a live dramatic and musical art performance.
Although other productions of Petitioner have been determined to be “circuses” (see TSB-A-99(25)S,
TSB-A-98(1)S), the name redacted production is significantly different than those productions. In both of
those Advisory Opinions, it was determined that the traditional elements that are characteristic of a circus
(i.e., acrobats, gymnasts, trapeze artists, clowns, etc). were predominant over the elements of the
production that are characteristic of a live dramatic or musical art performance. The opposite is true of the
name redacted production. In name redacted, there are acrobatic and gymnastic elements. However, those
elements further the continuing story line and choreography of the production, rather than being the focus
of the scenes in which those elements are used. Like the ice skating in the Ice Capades, the acrobatic and
gymnastic movements are parts of scenes that are combined to form the entire performance and are
“integrated with music, scenery, costuming and lighting to produce the desired effect.” See, Matter of
Metromedia, Inc. v. State Tax Commission, 75 AD2d 341 (3d Dept., 1980).
While we conclude that name redacted qualifies as a live dramatic or musical arts performance in
a theater as required in section 1115(x), we express no opinion on whether or not the tangible personal
property purchased or rented by Petitioner or the services rendered with respect to that property for this
production qualify for the exemption. Petitioner presented no facts specifying what tangible personal

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property was purchased or rented and how the property was used or what services were rendered. Thus,
we cannot opine on the eligibility of the tangible personal property or services for the exemption.

DATED: May 23, 2011

NOTE:

/S/
DEBORAH LIEBMAN
Deputy Counsel

An Advisory Opinion is issued at the request of a person or entity. It is limited to the facts set
forth therein and is binding on the Department only with respect to the person or entity to
whom it is issued and only if the person or entity fully and accurately describes all relevant
facts. An Advisory Opinion is based on the law, regulations, and Department policies in
effect as of the date the Opinion is issued or for the specific time period at issue in the
Opinion.