3 ms·

I assume because they can claim the actual cost of the movie production as an expense, and they’ll have no income to offset that expense.

PebblesHD 3y ago
I’d have expected you would need to demonstrate an attempt to generate income from an asset before the government would effectively give you a write off of the whole value. Anyway, thanks, hadn’t thought of it that way.
- plasticchris 3y ago
  This is not a problem if you are still making a profit and not an obvious tax shelter. After all, how would the IRS know which business expenses are intended to make a profit vs investments that didn’t pan out? There is obviously room for abuse there but it is for company ownership to deal with not the government.
toomuchtodo 3y ago
Could they not do the same if they donated it to the Library of Congress? They did intend to make a profit, but they are now destroying the value of the copyright by donating to the public domain due to updated market information.
- tourmalinetaco 3y ago
  Possibly, however, these are the same kinds of people who supported copyright length becoming 100 years. To them the public domain is a threat on their billions of dollars.
- p0ckets 3y ago
  There is some value in not having a "Coyote vs. Acme" film released this year (either by Netflix or the Library of Congress) because they could try to make a profitable version soon but people may not give a new version a fair chance if a really bad version was released recently. They presumably value that option more than whatever Netflix et al. offered.https://www.theverge.com/2024/2/9/24067496/coyote-vs-acme-amazon-netflix-paramount-rejected-offers-theatrical https://www.theverge.com/2024/2/9/24067496/coyote-vs-acme-am...
  - toomuchtodo 3y ago
    If they want to delay release to wait for better market conditions, absolutely understandable. But if they’re just going to destroy culture out of tax code mechanics, doesn’t hurt to be noisy. At least give it a chance to be preserved with some sort of arrangement.
    - p0ckets 3y ago
      What I mean is this movie is so bad it will ruin it for the next "Coyote" movie, so they don't want anyone to see this movie. Maybe the only compromise that works is to put it in a time capsule and not open it for 100 years.
      - toomuchtodo 3y ago
        That sort of long duration embargo seems reasonable vs destruction.
  - BoiledCabbage 3y ago
    Except the movie tested well with audiences
dathery 3y ago
By this logic isn't it still better to make whatever profit they can by releasing it? Yes they would increase their net income (and thus tax burden), but they should still end up ahead (it's not like they're paying >100% marginal tax rate on those dollars). It must be more complicated somehow, right?
- bsder 3y ago
  Not necessarily. The writeoff is apparently immediate--they will book the writedown this quarter. Revenue, however, will stretch out across a couple of quarters. So, the accountants are making this quarter look better at the cost of future quarters looking worse.
gruez 3y ago
It's slightly more complicated than that due to accruals/amortization. Suppose you started making a movie in January and released in in January the next year. The movie cost $1M to make. For accounting reasons you can't claim that in the first year you took a loss of $1M. Sure, that's what your bank statement says, but at the same time you're spending the money, you're also building up a movie, which has value. So your balance sheet would show you losing money from all the expenses in making a movie, but also gaining value from the movie being produced. If you expect the movie be worth more than $1M, your balance sheet might even show you turning a profit in year 1. If in year 2 you decide to shred it, you're technically not deducting the expenses paid into the movie, you're deducting the value of the movie on the balance sheet, built up from the previous year.

PebblesHD 3y ago

I’d have expected you would need to demonstrate an attempt to generate income from an asset before the government would effectively give you a write off of the whole value. Anyway, thanks, hadn’t thought of it that way.

plasticchris 3y ago
This is not a problem if you are still making a profit and not an obvious tax shelter. After all, how would the IRS know which business expenses are intended to make a profit vs investments that didn’t pan out? There is obviously room for abuse there but it is for company ownership to deal with not the government.

toomuchtodo 3y ago

Could they not do the same if they donated it to the Library of Congress? They did intend to make a profit, but they are now destroying the value of the copyright by donating to the public domain due to updated market information.

tourmalinetaco 3y ago
Possibly, however, these are the same kinds of people who supported copyright length becoming 100 years. To them the public domain is a threat on their billions of dollars.
p0ckets 3y ago
There is some value in not having a "Coyote vs. Acme" film released this year (either by Netflix or the Library of Congress) because they could try to make a profitable version soon but people may not give a new version a fair chance if a really bad version was released recently. They presumably value that option more than whatever Netflix et al. offered.https://www.theverge.com/2024/2/9/24067496/coyote-vs-acme-amazon-netflix-paramount-rejected-offers-theatrical https://www.theverge.com/2024/2/9/24067496/coyote-vs-acme-am...
- toomuchtodo 3y ago
  If they want to delay release to wait for better market conditions, absolutely understandable. But if they’re just going to destroy culture out of tax code mechanics, doesn’t hurt to be noisy. At least give it a chance to be preserved with some sort of arrangement.
  - p0ckets 3y ago
    What I mean is this movie is so bad it will ruin it for the next "Coyote" movie, so they don't want anyone to see this movie. Maybe the only compromise that works is to put it in a time capsule and not open it for 100 years.
    - toomuchtodo 3y ago
      That sort of long duration embargo seems reasonable vs destruction.
- BoiledCabbage 3y ago
  Except the movie tested well with audiences

dathery 3y ago

By this logic isn't it still better to make whatever profit they can by releasing it? Yes they would increase their net income (and thus tax burden), but they should still end up ahead (it's not like they're paying >100% marginal tax rate on those dollars). It must be more complicated somehow, right?

bsder 3y ago
Not necessarily. The writeoff is apparently immediate--they will book the writedown this quarter. Revenue, however, will stretch out across a couple of quarters. So, the accountants are making this quarter look better at the cost of future quarters looking worse.

gruez 3y ago

It's slightly more complicated than that due to accruals/amortization. Suppose you started making a movie in January and released in in January the next year. The movie cost $1M to make. For accounting reasons you can't claim that in the first year you took a loss of $1M. Sure, that's what your bank statement says, but at the same time you're spending the money, you're also building up a movie, which has value. So your balance sheet would show you losing money from all the expenses in making a movie, but also gaining value from the movie being produced. If you expect the movie be worth more than $1M, your balance sheet might even show you turning a profit in year 1. If in year 2 you decide to shred it, you're technically not deducting the expenses paid into the movie, you're deducting the value of the movie on the balance sheet, built up from the previous year.