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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 m

by 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.
- pests 3y ago
  Why do they get to instantly claim it as a loss with no proof? Can I just destroy the factory on a whim and then write it off too?
  - gruez 3y ago
    > Why do they get to instantly claim it as a loss with no proof? Is your concern that they claim they destroyed the movie, but really kept a backup somewhere? >Can I just destroy the factory on a whim and then write it off too? I don't see why not. It's not any different than companies destroying inventory and claiming a write-off. The supreme court even affirmed it. See sibling comment: https://news.ycombinator.com/item?id=39354276 https://news.ycombinator.com/item?id=39354276

by pests 3y ago

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.

pests 3y ago
Why do they get to instantly claim it as a loss with no proof? Can I just destroy the factory on a whim and then write it off too?
- gruez 3y ago
  > Why do they get to instantly claim it as a loss with no proof? Is your concern that they claim they destroyed the movie, but really kept a backup somewhere? >Can I just destroy the factory on a whim and then write it off too? I don't see why not. It's not any different than companies destroying inventory and claiming a write-off. The supreme court even affirmed it. See sibling comment: https://news.ycombinator.com/item?id=39354276 https://news.ycombinator.com/item?id=39354276