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From my understanding, taxes are not in any way a judgement of how you conduct your business. The IRS can't have an opinion on the fact that throwing away this

From my understanding, taxes are not in any way a judgement of how you conduct your business. The IRS can't have an opinion on the fact that throwing away this movie makes absolutely no business sense. It's a property of the company that legally made expenditures to produce it. If the company decides to trash it, it could be the stupidest business move ever, but as long as the expenses filings are legal and proven, the books are fine. It's not even a loophole, really. So, in the end, it's not about the system. It's just about how bad it gets when a creative company is run by soulless Excel people.

tourmalinetaco 3y ago
So, in the end, it’s not about the tax system, but about the market system and how it prioritizes soulless short term gains and monopolizing (while paying off governments to avoid anti-monopoly laws) rather than creativity and long term growth?
- slowmovintarget 3y ago
  No. It's the tax system. If they couldn't turn this into a write-off, they'd go ahead and bring it to market. They shouldn't be able to claim it as a write-off if they destroy their own good before they allow it to sell in the market.
  - tourmalinetaco 3y ago
    They aren’t turning it into any more of a write off than it was before. It’s only the expenses being written off, which are ALWAYS written off because that's how business tax law works. So as long as it’s a business expense and not a hobby loss then it’s essentially no different than them releasing it and no one watching it. Personally I believe any and all projects that fail to enter the marketplace should be given to the public domain instead, however I am also of the “extreme” notion that copyright should exist for only around 10 years.
pests 3y ago
But they don't have losses. They have expenses. They converted dollars into an asset, the movie. Just because you spend $1 million to build a factory doesn't mean you get to run to the IRS and claim $1 million in losses. You still own the factory. Its up to you to run it to get your investment back.
- add-sub-mul-div 3y ago
  If a disaster destroys the factory, it can be a writeoff. But yeah, you can't claim an intact factory as a loss and continue to use it as an asset. Warner Brothers has made the business decision that the movie is not valuable. Releasing a bad product can do harm to a business, so the movie isn't an asset that can automatically be assumed to have positive value. And there is a cost to releasing a movie, even if minimally marketed, there's opportunity cost if nothing else to getting it out the door. Right or wrong, it's their decision to make that their investment has more value as a writeoff. They just can't write it off and then change their mind and decide to release it next year. (Unless they amend the return that declared it a writeoff.)
  - pests 3y ago
    I still don't buy it. I don't like how they get to declare it has no positive value all by themselves. If they claimed the disaster destroyed the factory wouldn't we go and check it was actually destroyed?
    - add-sub-mul-div 3y ago
      The IRS would definitely investigate fraud if that was suspected. But this is a pure judgment call. The IRS will only be concerned that they don't use the movie as an asset, it's not their place to take a position on the business strategy. Tax laws can be pretty friendly to businesses. Whether we like it or not.
- gruez 3y ago
  >Just because you spend $1 million to build a factory doesn't mean you get to run to the IRS and claim $1 million in losses. You still own the factory. Right, that's why they're destroying it so it's not sitting on their balance sheet, and can claim it as a loss.
Brian_K_White 3y ago
When your house burns down, you get to tell your insurance that you suffered a loss. When you burn your own house down, you don't. I can only assume that WB's lawyers know things and there must be technicalitioes and discrepencies such that you CAN effectively do that with the IRS even though your would go to jail for trying that with insurance. But in a sane world...they're burning their own asset, and they should be legally allowed to do that, but just not claim it as any sort of misfortune to any party, private insurance or public taxes.
- gruez 3y ago
  > When your house burns down, you get to tell your insurance that you suffered a loss. >When you burn your own house down, you don't. That's not how it works at all. The reason why you can't collect your insurance policy when you burn your house down is because it specifically says it doesn't pay out if you intentionally set it on fire. No such clause exists for the tax system. Companies destroy inventory all the time to get write-offs on them.
  - camillomiller 3y ago
    Exactly. And rightfully so! The tax system can't be opinionated, or it would be extremely legally unstable. Unfortunately, for this reason, it's also a system that can't bake in any level of morality on the way legal tax loopholes are exploited, even when there's a clear moral downside in burning an asset that's the byproduct of intellect.
- heyoni 3y ago
  They’re not claiming insurance though. The question you should ask is whether burning your own house down is considered a loss on your tax returns? I don’t see why not.

tourmalinetaco 3y ago

So, in the end, it’s not about the tax system, but about the market system and how it prioritizes soulless short term gains and monopolizing (while paying off governments to avoid anti-monopoly laws) rather than creativity and long term growth?

slowmovintarget 3y ago
No. It's the tax system. If they couldn't turn this into a write-off, they'd go ahead and bring it to market. They shouldn't be able to claim it as a write-off if they destroy their own good before they allow it to sell in the market.
- tourmalinetaco 3y ago
  They aren’t turning it into any more of a write off than it was before. It’s only the expenses being written off, which are ALWAYS written off because that's how business tax law works. So as long as it’s a business expense and not a hobby loss then it’s essentially no different than them releasing it and no one watching it. Personally I believe any and all projects that fail to enter the marketplace should be given to the public domain instead, however I am also of the “extreme” notion that copyright should exist for only around 10 years.

pests 3y ago

But they don't have losses. They have expenses. They converted dollars into an asset, the movie. Just because you spend $1 million to build a factory doesn't mean you get to run to the IRS and claim $1 million in losses. You still own the factory. Its up to you to run it to get your investment back.

add-sub-mul-div 3y ago
If a disaster destroys the factory, it can be a writeoff. But yeah, you can't claim an intact factory as a loss and continue to use it as an asset. Warner Brothers has made the business decision that the movie is not valuable. Releasing a bad product can do harm to a business, so the movie isn't an asset that can automatically be assumed to have positive value. And there is a cost to releasing a movie, even if minimally marketed, there's opportunity cost if nothing else to getting it out the door. Right or wrong, it's their decision to make that their investment has more value as a writeoff. They just can't write it off and then change their mind and decide to release it next year. (Unless they amend the return that declared it a writeoff.)
- pests 3y ago
  I still don't buy it. I don't like how they get to declare it has no positive value all by themselves. If they claimed the disaster destroyed the factory wouldn't we go and check it was actually destroyed?
  - add-sub-mul-div 3y ago
    The IRS would definitely investigate fraud if that was suspected. But this is a pure judgment call. The IRS will only be concerned that they don't use the movie as an asset, it's not their place to take a position on the business strategy. Tax laws can be pretty friendly to businesses. Whether we like it or not.
gruez 3y ago
>Just because you spend $1 million to build a factory doesn't mean you get to run to the IRS and claim $1 million in losses. You still own the factory. Right, that's why they're destroying it so it's not sitting on their balance sheet, and can claim it as a loss.

Brian_K_White 3y ago

When your house burns down, you get to tell your insurance that you suffered a loss. When you burn your own house down, you don't. I can only assume that WB's lawyers know things and there must be technicalitioes and discrepencies such that you CAN effectively do that with the IRS even though your would go to jail for trying that with insurance. But in a sane world...they're burning their own asset, and they should be legally allowed to do that, but just not claim it as any sort of misfortune to any party, private insurance or public taxes.

gruez 3y ago
> When your house burns down, you get to tell your insurance that you suffered a loss. >When you burn your own house down, you don't. That's not how it works at all. The reason why you can't collect your insurance policy when you burn your house down is because it specifically says it doesn't pay out if you intentionally set it on fire. No such clause exists for the tax system. Companies destroy inventory all the time to get write-offs on them.
- camillomiller 3y ago
  Exactly. And rightfully so! The tax system can't be opinionated, or it would be extremely legally unstable. Unfortunately, for this reason, it's also a system that can't bake in any level of morality on the way legal tax loopholes are exploited, even when there's a clear moral downside in burning an asset that's the byproduct of intellect.
heyoni 3y ago
They’re not claiming insurance though. The question you should ask is whether burning your own house down is considered a loss on your tax returns? I don’t see why not.