Warner Brothers has not only intent, but a demonstrated profit margin, which they are deducting the movie from.
Why shouldn't they be able to deduct there very real losses.
Why shouldn't they be able to deduct there very real losses.
Ultimately we write tax policy for the benefit of society, not for Warner Bros. In theory, we could write tax law so that it made financial sense for a factory to produce widgets and send them directly into an incinerator, because they could claim this as a "loss" and offset profits from other activities. But we shouldn't have a tax law that does that, because that's a huge waste of society's resources (materials for the widgets, fuel for the incinerator, people's time and labor). We could use those resources to do something more productive and tax laws should encourage companies to do productive things that improve the world, not spin their wheels for imaginary losses.
If you deliberately burn down your house and try to collect insurance on it, we call that insurance fraud. If you deliberately destroy your product and try to claim a tax loss on it, that should be fraud too.
That is exactly how it works. You already spent X on an asset. If you throw the asset away, then you just have deductible expenses.
Same for the widget factory. You can deduct the material and factory expense of making of making defective widgets. If you trash them, you write down the value of your assets.
>But we shouldn't have a tax law that does that, because that's a huge waste of society's resources (materials for the widgets, fuel for the incinerator, people's time and labor).
This is the crux of things. Those arent society's resources, and never were. They are resources of the warner Bros and the widget factory.
Tax law isnt and shouldn't be about forcing people to do what you want. If someone wants to waste their time and resources, that is their choice.
It seems like this whole thread is people angry that they dont own the property of others, and get to control them.
What's to stop the CEO from building a mansion with the company's resources and selling it to himself for $1? Then having the company write it off as a loss? Oops! It was just a bad business decision and the company lost money. Oh well! We can't stop them from wasting their resources if they want to!
Nobody is giving warner bros money. They arent getting a cash tax refund. They just spent more money and made less profit. If they wanted to make zero profit, and pay zero taxes, that is their choice!
If a commpany wants to sell houses at a loss, that is legal, and happens all the time. If they are self dealing, the shareholders could have an issue with it, or the IRS if the CEO doesn't report it.
Guess what, Companies DO give CEOs many millions of dollars of salary and stock. Every bit of that is tax deductible expense for the company.
>Oh well! We can't stop them from wasting their resources if they want to!
It is literally none of your business because they aren't your resources! It is like complaining your neighbors have fun on Sunday instead of working and paying more taxes.
Yes, the key word there is net profit, and the ways to calculate net profit for tax purposes are prescribed by law. Not every single penny a company spends is automatically a deductible business expense. Some things are, some things partially are, some have to be amortized over time, some are not deductible at all. There's thousands of pages of tax law delineating this and it is not in the slightest without precedent to declare a particular expense non-deductible.
From the moral perspective, it is clear that WB clearly had real expenses. They spent money, bought rights, and tons of workers were paid good money.
Now you pivot to the legal argument. The current law clearly supports what Warner Bros is doing, so that doesnt help you either.
like I said before. It seems like this entire thing boils down to a control issue. you dont like how WB is running their company and doing with their property.
It isnt you business, both figuratively and literally.
Yes, they had expenses. You seem to have a very very rudimentary understanding of accounting and have conflated expenses with losses. An expense is not a loss. If you buy a factory for $1 million, you didn't lose $1 million dollars. You now have an asset, a factory, that is worth approximately $1 million. You don't get to go to the IRS and say "I lost $1 million dollars this year because I bought a factory". The IRS will tell you, no you didn't. You still have your $1 million, it's just now in the form of a factory instead of cash.
Likewise, WB spent money and created an asset, a film. That film has a market value. Maybe they don't like the film, but that doesn't change the reality that it's worth something. We know approximately how much it's worth because several other companies made offers to buy it.
Instead WB wants to lie and say it isn't worth anything. So, no I don't like how they are running their company when they want to lie and cheat to get out of paying the taxes they owe. You can't buy a factory for $1 million and then turn around and say "yeah, it's not worth anything anymore", and you shouldn't be able to say a movie isn't worth anything when it very clearly is. We do not gain anything by enabling companies or anyone to deny reality.
How is that a lie?
Why would a greedy company ever intentionally reduce the value to $0 via destruction instead of selling it for $10M?
10M sale plus a 80M deduction is far better than a $90M deduction.
That's how a company can lose more money on a $10 million sale then deleting it. If you have to include more than $10 worth of IP or obligations with the sale is a negative return. Alternatively, selling a movie could cost you more than $10 million in losses on a different movie.
These are all legitimate reasons to destroy instead of sell it. Avoiding costs are fundamentally different than increased Revenue for the purpose of taxes, even if they're monetary value is the same. Cost avoidance is not taxable value creation.
I can save $20 in laundry fees by not shitting in my bed, but I don't pay taxes on the value I saved. This is for two reasons. First, I'm no richer off after not shitting in my bed then I was before. Second, the alternative is I would have to pay taxes on every second of every day I chose not to shit in my bed.
I don't think that any retained rights are being valued at zero, besides the distribution rights to a a movie that doesn't exist.
If they keep the rights to develop a script, for example, that would have some tiny residual value.
You clearly have some kind of philosophical objection to taxes in general and a very confused notion that companies are allowed to just deduct anything they want without any restrictions and that is not how this works in the slightest.
This isn’t complicated. If you make a movie and release it and nobody goes to see, ok you lost money, write it off. If you make a movie and it’s not working out and you sell the rights to someone else to cut your losses, ok you lost money, write it off. If you make a movie and then you’re like “jk lol I just want tax deductionz plz.” No, screw you. You’re just playing games with the tax system instead of making movies, so fuck off.
More importantly: money that is not in circulation doesn't affect you or me, it has the same weight on the economy as all the gold still not mined.
Also moving money from your left hand to your right is not circulation. It should "trickle down". Wonder where I heard this.
It's literally there to serve infrastructure and rebalancing needs without which the individuals end up sitting in ruined playpens, drowning in their own filth and unable to do commerce with anybody else.
Never mind about when the 'individual' is a corporate entity that rightly or wrongly thinks itself obligated to chase the most ruinous short-term strategy it can find, as a matter of fiduciary duty. That just exaggerates what already happens with ambitious human individuals.
Tax law is only and solely about forcing people to do what you want, starting with the very concept that people will never want long term thinking or cooperation in any significant way. (in fact, people will want cooperation, but sociopaths, human or corporate, will tend to stomp all over the cooperation-wanting people, wreck their stuff, then want a tax write-off because the stuff they wrecked is now broken)
Indeed we could, but unfortunately we already have cryptocurrency.
Agreed on every other aspect of your observation.
Maybe when it's 'an amazing and new Road Runner movie', the waste has a more appealing face?