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
Because it’s Reddit and people keep parroting things they don’t understand.
A tax write-off is sometimes the lesser of two evils for a company, but you can’t make money on it, only limit losses.
Assuming a 20% tax rate, and that you have other profits to offset the write off :
You spend $100M on the movie and write it off as complete loss
You will reduce your taxes by -20% x 100 = $20M
The whole projet is still a $80M net loss for you.
They only do it when the alternative is spending more on marketing and distribution and earn even less
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