Did they not incur such losses? Did they claim to delete the movie but actually kept a backup? Granted, the loss is self-inflicted, but that's not a relevant factor in the tax code.
That's fraud because the insurance policy specifically says it won't pay out if you intentionally set it on fire. If you actually did set it on fire, then claimed that you didn't then that's the deception.
>No, you are not entitled to claim it as a write-off.
Can you point to the relevant tax law that prevents this?
A fire if you willfully set it, or pay someone else to set it.
A car accident if your willful negligence or willful act caused it. The same is true if the willful act or willful negligence of someone acting for you caused the accident. Progressive deterioration (explained below). However, see Special Procedure for Damage From Corrosive Drywall, later.”
https://www.irs.gov/publications/p547#en_US_2023_publink1000...
That's right. But when all the dust settles, writing off an asset that had market value when you intentionally destroyed it will not pass an audit.
Actually if you read the sibling comment[1], such list of "things you can't deduct" does exist, albeit it's seemingly for personal taxes.
It’s very different because insurance pays out to make whole. Taxes are just taxes.
It’s the equivalent of burning your house down and then writing off the depreciated value because it burned down. Totally legal. Because it’s worth less after burning it down. Assuming you burn it in a legal, controlled manner and not arson.
> Assuming you burn it in a legal, controlled manner and not arson.
Yes, well, that is a might big assumption. I doubt you could point me to a single instance of someone actually burning down their house in a "legal, controlled manner".
It ultimately boils down to details. If there really were a legitimate reason to destroy a film (or a house) rather than selling it to the highest bidder then you might have a case. But you'd be very hard-pressed to come up with a set of legitimate circumstances for either one.
nobody is entitled tax revenue. Laws generally support taxes on income/profit, and arent just a bill.
It isn't illegal to work less and pay less taxes.
It is absolutely legal to knock down your house so you dont have to pay property or mortgage tax on it.
Yes, that's true. But that's not the same thing as claiming the resulting loss as a deduction on your income tax.
which you can also do. If you knock down your house, then sell it, you will have a pretty heafty capital loss, which you can then use as a income deduction for up to 8 years, or until it runs out.
Yes, but you have to sell it, at which point it's a capital loss. And you can sell the movie and take a loss that way as well (assuming you actually sell it at a loss).
What you cannot do is delete the movie and then claim it as a capital loss -- because you haven't sold it.
nobody is entitled tax revenue. Laws generally support taxes on income/profit, and arent just a bill.
It isn't illegal to work less and pay less taxes.
It is absolutely legal to knock down your house so you dont have to pay property or sales tax on it.
Generally property taxes are on the land and its improvements (eg. houses), so burning down the house wouldn't relieve you of property tax obligations. Moreover, destroying the house would actually reduce your tax obligations, and AFAIK isn't illegal.
It would also allow you to avoid taxes on the sale of the house.
>nobody is entitled tax revenue. Laws generally support taxes on income/profit, and arent just a bill.
>It isn't illegal to work less and pay less taxes.
>It is absolutely legal to knock down your house so you dont have to pay property or sales tax on it. You are making the same point.
It is closer to burning down your house to avoid property or sales tax.
1. claiming insurance on it. AFAIK this isn't applicable in the case of the movie
2. endangering other houses by doing it in a non-approved way
Other than that setting houses that you own on fire isn't illegal.
If you read the thread more carefully, you'll see I never made such a claim. The only claim I made is that it's not fraud. I thought this was pretty clear with my earlier comment:
> "fraud" doesn't mean "losing money in a manner I don't like", so I ask again: where's the deception here?
This is all above board, totally normal behavior. There are reasons to be against destroying these movies, but tax fraud really isn’t one of them. They actually did take the loss of whatever was the remaining value of that asset.
And how do we encourage them as much as possible to take that option?
The overall point is I don’t think it’s rare to destroy an asset that you could sell, and to take a deduction for that. Comments were calling that fraud.
It just tells you when you have to pay and when you don't have to pay. If they didn't explicitly write in that you're not allowed to burn a movie, then burning a movie gets you a tax break. End of.
True, there are multiple reasons why some expenses aren't deductible, but AFAIK no such exception exists for "intentionally destroying it".
>and that’s likely based on Hollywood’s unique accounting practices, which has a tendency to inflate the claimed expense amount.
See my other comment here: https://news.ycombinator.com/item?id=39339493
There's no way that you can save taxes by doing this.
No, of course not. There isn't an enumerated list of weird cases and if your weird case doesn't match you can get a tax advantage. There are rules about what is and isn't deductible and if you're unclear, you can ask the IRS for a clarification. If you don't get that clarification you better be prepared to adequately defend your tax theory when you get audited. What I suggested is what they're doing may not be in line with the rules about what is deductible. It seems like something should be evaluated.
> There's no way that you can save taxes by doing this.
You absolutely can save taxes by doing this. They're not only not paying any tax, they're offsetting tax they would otherwise pay on a profitable film. I think what you're saying is that they couldn't get enough tax deductions to offset the money they put into the film development. That's a claim I didn't make. I do think it's possible they could get back more money than they otherwise should. It's not like tax fraud is a rare occurrence. And that situation could make this maneuver more attractive. I think it's worth an audit.
> "fraud" doesn't mean "losing money in a manner I don't like", so I ask again: where's the deception here?