Eli5: what are tax write off films, how it all works and isnt it a waste of money?
In: Economics
You don’t start out trying to make a tax write-off film. You realize a film isn’t going to be to be successful and pull the plug on it before investing more money.
Basically, it’s about avoiding the sunk cost fallacy and cutting losses. The tax code lets some of those losses be written off against profits made elsewhere.
The studio doesn’t “make money” with the write off. It just loses less by using the loss to reduce its existing tax burden. But it’s still a loss.
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