Movie Tax Write-Downs Help Studios Profit at Public's Expense | Hacker News Reader

Movie Tax Write-Downs Help Studios Profit at Public's Expense

news.bloombergtax.com

38 pointstldrthelaw8 comments

Wow, how is it even possible to "sell" tax credits? Surely any credits are tied to the EIN/TIN of whatever organization "earned" them:

  "Most studios owe little in state taxes, so they opt to sell the credits through private brokers at a discount of about 10%, on average.

  Let’s say, for example, $50 million in qualified expenses is returned to the studio as a credit for $15 million, which is then sold for $13.5 million—a substantial reimbursement for the movie studio"

Apparently, it's a whole thing: https://www.mossadams.com/services/accounting/tax/credits-an...

Should it be a whole thing?

Probably not.

Absolutely not.

Via the Low-Income Housing Tax Credit program, sale of tax credits is how the US has funded below market rate housing at the Federal level since the tax reform of 1986.

https://www.huduser.gov/portal/datasets/lihtc.html

Reductions in corporate tax rates at the Federal level have the effect of shrinking the pool of money for development of housing at below market rates because they make demand for tax credits fall.

But of course, reducing the supply of below market rate housing is a feature not a bug for people who seek market rate rents on housing assets.

They should be required to publish and abandon the copyright in these cases.

Aside, Pantheon season 2 is a victim of these tax hacks-- it's great and yet it'll never be released in North America as a result.

I don't understand the economic equation though. Wouldn't the studios recoup only the tax equivalent of the amount they write down, which by definition is only a portion of it?

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