What is a "tax write off"?
Let's say that I have this one movie that is finished that I spent 80 million to make. I decided to "write it off". So when I get to pay my taxes, do I get a 80 million discount?
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Let's say that I have this one movie that is finished that I spent 80 million to make. I decided to "write it off". So when I get to pay my taxes, do I get a 80 million discount?
If you invest 80 million and make 80 million in return, it's a wash, and you wouldn't pay any taxes because you didnt make any money.
You would have to invest 80 million in a movie, scrap it, and then 80 million in another movie, which goes on to make 160 million in order to have 80 million in profits to offset with an 80 million write off. This would result in a net $0 made for tax purposes.
I don't get how it makes sense to scrap finished movies instead of releasing them then. Why claim 80 mil tax write off, when you can make 20 mil and claim 60 mil tax write off. Unless the tax rate is ≥100% you're losing money doing that
Likely, scrapping a movie isnt completely finished and there would be additional post-production costs that would have to be paid to make the product ready for release. If they're not expecting much return by releasing it on streaming or something like that, then it could make sense to not finish.
Sell it to Netflix for $10M and Netflix pays the post production costs.
Seems to me it's more likely due to some contractual obligations that they don't have to pay if the movie isn't released at all. It's something you don't really see happen with other studios than WB. WB probably just has some weird shit going on in their contracts. They just say it's a tax write off (which is true) but don't mention it's really because they put something in some contracts that says they only have to pay if the movie is released.