4 ms·

Sure, that sounds fine, but the taxpayer ought to not be responsible for footing the bill in any way. The studios do this for the tax writeoff, which is tantam

Sure, that sounds fine, but the taxpayer ought to not be responsible for footing the bill in any way. The studios do this for the tax writeoff, which is tantamount to robbing the people paying taxes (eg:us) blind.

gruez 3y ago
It's not "robbing the people paying taxes" because the money was never theirs to begin with. Taxes are paid on profits, and if profits are not made they're not owed. Suppose I make a painting worth $1000. If I had sold that, I would have been required to pay taxes on that at the marginal rate, say 40% so $400 worth of taxes. Instead of doing that, I set it on fire. Does that mean I just robed taxpayers of $400?
- blowski 3y ago
  I bet the owners of the film studio had a really hard Christmas that year, with no profits. The issue is that the studio takes the profit if it succeeds, the taxpayers take the losses if it doesn’t.
- muricula 3y ago
  It's not setting the fire which causes taxpayers to lose money, it's writing off the loss against taxes you would have otherwise paid on profits made from other movies.
  - gruez 3y ago
    Not an accountant, but tax write-offs aren't some sort of no tax glitch that you make them seem. You can only deduct losses that you've actually suffered, not imaginary losses. If you spent $10M into making a movie, you can't value the movie at $80M and then use that against all your other revenues to pay less taxes. If this were true every company would be making fake movies to destroy and pay less taxes, not destroy actual movies that they spent millions on.
  - derivative7 3y ago
    Taxing people on income they didn't make but the government imagined they could have made in some situation that didn't happen sounds like a slippery slope to be standing on.
- isthatafact 3y ago
  It feels like tax fraud. Given that it is apparently not possible to prove that they deleted the movie, it seems like the IRS should assume that they still have the movie. I bought a stock share for $1000. I wanted to sell it for $2000, but no one was willing to pay more than $400, so I decided to tell the IRS that it was worth zero and take the full tax write off (which was tax fraud). On top of that, refusing to release or sell the movie should have triggered a shareholder lawsuit.
  - gruez 3y ago
    > Given that it is apparently not possible to prove that they deleted the movie, it seems like the IRS should assume that they still have the movie. Even if they didn't delete the movie, the fact that they claimed to have deleted the movie and used it as a tax credit basically makes the value $0, because in the unlikely event they have a copy around, they wouldn't be able to sell it without having all of the profits seized from them.
  - dahart 3y ago
    > Given that it is apparently not possible to prove that they deleted the movie Why does it matter if they delete it or not? As long as they don’t sell it, they don’t make a profit on it, and don’t pay taxes on the profits. If they didn’t delete it and then actually sold it after enjoying their tax break, then they’d be committing actual tax fraud. > refusing to release or sell the movie should have triggered a shareholder lawsuit And yet it didn’t. So maybe shareholders are fine with it? Why should shareholders sue when a company doesn’t release a product? This literally happens all the time.
sib 3y ago
Many of the people on this site are involved in technology (software and/or hardware) product development. If they work for a company that spends $10M in development salaries & related costs to build a product, and then decides not to release that product, the company certainly deducts those development costs from its revenues when it files its taxes. This is true even if some third party had made an offer to acquire the product - there are many valid reasons why the first company may choose not to sell it.

gruez 3y ago

It's not "robbing the people paying taxes" because the money was never theirs to begin with. Taxes are paid on profits, and if profits are not made they're not owed. Suppose I make a painting worth $1000. If I had sold that, I would have been required to pay taxes on that at the marginal rate, say 40% so $400 worth of taxes. Instead of doing that, I set it on fire. Does that mean I just robed taxpayers of $400?

blowski 3y ago
I bet the owners of the film studio had a really hard Christmas that year, with no profits. The issue is that the studio takes the profit if it succeeds, the taxpayers take the losses if it doesn’t.
muricula 3y ago
It's not setting the fire which causes taxpayers to lose money, it's writing off the loss against taxes you would have otherwise paid on profits made from other movies.
- gruez 3y ago
  Not an accountant, but tax write-offs aren't some sort of no tax glitch that you make them seem. You can only deduct losses that you've actually suffered, not imaginary losses. If you spent $10M into making a movie, you can't value the movie at $80M and then use that against all your other revenues to pay less taxes. If this were true every company would be making fake movies to destroy and pay less taxes, not destroy actual movies that they spent millions on.
- derivative7 3y ago
  Taxing people on income they didn't make but the government imagined they could have made in some situation that didn't happen sounds like a slippery slope to be standing on.
isthatafact 3y ago
It feels like tax fraud. Given that it is apparently not possible to prove that they deleted the movie, it seems like the IRS should assume that they still have the movie. I bought a stock share for $1000. I wanted to sell it for $2000, but no one was willing to pay more than $400, so I decided to tell the IRS that it was worth zero and take the full tax write off (which was tax fraud). On top of that, refusing to release or sell the movie should have triggered a shareholder lawsuit.
- gruez 3y ago
  > Given that it is apparently not possible to prove that they deleted the movie, it seems like the IRS should assume that they still have the movie. Even if they didn't delete the movie, the fact that they claimed to have deleted the movie and used it as a tax credit basically makes the value $0, because in the unlikely event they have a copy around, they wouldn't be able to sell it without having all of the profits seized from them.
- dahart 3y ago
  > Given that it is apparently not possible to prove that they deleted the movie Why does it matter if they delete it or not? As long as they don’t sell it, they don’t make a profit on it, and don’t pay taxes on the profits. If they didn’t delete it and then actually sold it after enjoying their tax break, then they’d be committing actual tax fraud. > refusing to release or sell the movie should have triggered a shareholder lawsuit And yet it didn’t. So maybe shareholders are fine with it? Why should shareholders sue when a company doesn’t release a product? This literally happens all the time.

sib 3y ago

Many of the people on this site are involved in technology (software and/or hardware) product development. If they work for a company that spends $10M in development salaries & related costs to build a product, and then decides not to release that product, the company certainly deducts those development costs from its revenues when it files its taxes. This is true even if some third party had made an offer to acquire the product - there are many valid reasons why the first company may choose not to sell it.