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Comment by rjett | Hacker News Reader

See Hollywood Accounting: http://tvtropes.org/pmwiki/pmwiki.php/UsefulNotes/HollywoodA...

Which, to be clear, is about studios making it appear that they never make a profit so that they can minimize their payout in bonuses, royalties, and taxes.

One particularly famous example: "Harry Potter and the Order of the Phoenix" earned $940M at the worldwide box office, yet Warner Brothers reported the film at a $167M loss on paper.

Link with an itemized, Hollywood Accounting-style breakdown:

https://www.techdirt.com/articles/20100708/02510310122.shtml

Serious question: how this can be legal?

If I have to explain myself to IRS why I bought 1TB drive instead of 500GB because in their opinion I did not have enough to backup, hence supposedly I attempted to defraud IRS on extra $6.00 of tax, why can they get away with hundreds of millions or even few billions?

Serious question: did that thing with the hard drive actually happen to you?

The reason the IRS doesn't care is because they get their tax money regardless. They just get it from the subsidiary instead of the people ot should have gone to.

You must've run over the taxman's dog or something.

Hollywood executives swerved away from the dog, having watched enough movies to know that's how villains get made.

I call BS.

Doesn't that work in the opposite direction? The "true" breakeven point is much lower than what the studios claim, not higher.

Yes. "Hollywood Accounting" means cooking the books to make a success look like a failure when to comes to paying people (like the IRS) who get a percentage of the profit.

How is it possible ? don't the IRS demand detailed recipts for every expense ? while sales are easily trackable.

They do have receipts since they own both sides of the transaction.

And to be honest, I'm not sure if the IRS cares since the profit gets taxed at some point in time.

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