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
Hollywood accounting.
Films never make “net profits”. Money is made sometimes before even any filming is done or before the production starts, through opaque funding schemes.
As the accountant Bloom in Mel Brooks’ The Producers realises,
“Leo realizes that, as a flop is expected to lose money, the [IRS](https://en.wikipedia.org/wiki/Internal_Revenue_Service) will not investigate its finances, so a producer could earn more from a flop than from a hit by overselling interests and [embezzling](https://en.wikipedia.org/wiki/Embezzlement) the funds.”
[https://en.wikipedia.org/wiki/The_Producers_(1967_film)](https://en.wikipedia.org/wiki/the_producers_(1967_film))
The Producers scam isn’t as sophisticated as real Hollywood accounting but it gives some insight into what goes on.
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