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...
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.
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.
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.
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?
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?
