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
When you make money, you have to pay taxes on it. When you accept that you have lost money, you can use that loss to offset your profits from other films.
When you pay 30-40% in taxes then the loss is valuable to you because it saves you paying taxes on other income. With distribution and marketing costs representing half of the cost of some films, cancelling before you spend that is smart. Getting back 30-40 cents on the dollar for the money wasted on Coyote vs Acme is better than just flushing it away.
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