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What is a "tax write off"?
(lemmy.world)
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this post was submitted on 11 Feb 2024
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No. You're doing the math wrong.
You make 2 movies that cost $80m each, you have spent $160m. One of them gets shelved and makes no money, one of them makes $120m. You are still at a $40m loss. You haven't made any money to pay tax on at all. You have only lost money.
You are approaching this with the preconceived notion that is some kind of scam, which it's not.
The only benefit to shelving the first movie is if you think it'll cost more money to finish, market, and release it than money it will bring in. They are cutting their losses, not magically generating money out of thin air.
But what doesn't make sense to me is if let's say WB sold the movie to Netflix for $20 million, They're still taking a loss of $60 million and could still write that off, can't they? Why is it better to write of an $80M loss than it is to make $20M and write off a $60M loss? Why forego making some money back on an investment (even if it's a small percentage) only so they can write off a larger loss? Even if they sold a movie to Netflix for $1M they're still making $1M and can still write off the loss of $79M and it's still better for them isn't it?
This is why it feels like shenanigans. Why completely shelve a movie instead of putting it on a streaming service to recoup some of the loss? They streaming services will put basically anything on them nowadays.
Oh it's because if you sell something for 20 million that cost you 80 million and the person you sell it to makes more than 20 million you are are giving profit to your competitors and your board of directors will fire you for being bad at your job. It cant just be a decision that's good for you, it has to also not show that you were wrong about its value and give that value away to you competitor to make you look bad. The good if the intended audience isn't factored in beyond hours much they expect to make of released
If they claim it as a loss it's very hard to ever use it again so they effectively have to ignore it's existence forever.
This is how i understand it. I'm sure the community will correct anything it got wrong and i thanks them for it