They’ve just cancelled their upcoming film “Coyote vs. Acme,” and everyone is calling it a tax write-off, just like they did with the cancelled Batgirl film.
Having spent so much on the production of these films, how is it beneficial to them to cancel the film outright? What is a tax write-off in that sense?
In: Economics
Let’s say you own a lemonade stand. You sold $2,000 of lemonade, minus $500 of lemons&sugar, minus $500 it cost to build the stand equals a $1,000 profit. You owe a 21% tax on that profit, so $210.
Let’s say you own a second lemonade stand, but this one only sold $500 of lemonade. Minus the $500 of lemons you bought, minus the $500 to build the stand it balances out to a $500 loss.
$1,000 profit minus the $500 loss = $500 overall profit when you file your taxes and a $105 tax bill.
“Writing something off” is slang for cutting your losses and stopping a project. At that point someone does the accounting and declares the final profit/loss. As far as WB writing off those movies, they essentially decided that it would cost more time/money to complete the projects and market them than they’d make back at the box office. Movie studios regularly spend more marketing movies than they do making them so even though the projects were close to finished going forward would be doubling down on a bad gamble.
Latest Answers