1. An apparatus, comprising: an encoder for encoding picture data for at least a portion of a picture, comprising: circuitry that generates an inverse tone mapped inter-layer residue prediction for the portion by combining a tone mapped enhancement layer frame with a base layer residual and base layer motion data to form an alternative smooth base layer reference frame, and motion compensation circuitry that uses an inverse tone mapping operation on said smooth base layer reference frame in the enhancement layer, performed in the pixel domain for bit depth scalability, for motion compensation, and a switch that switches to an original reference to use for motion compensation, based on a determination between intra-layer motion estimation and inter-layer motion prediction, and wherein the inverse tone mapping operation is shifted from a residue domain to the pixel domain.