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Joined 1 year ago
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Cake day: June 2nd, 2023

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  • The second part of this comment doesn’t make a lot of sense.

    My understanding is that the tax system allows for the declaration of depreciation in assets as a business expense. This is fine for assets with transparent market valuations.

    The part where this system could be abused is in willfully withholding the release of a movie, overvaluing the expected revenue, and then subsequently declaring the lack of revenue as a depreciation in assets which is then declared as a business expense to reduce the tax burden.

    A clearer example of this, with very obvious fraud, might be:

    • I paint a picture, spending about an hour of my time and 30$ of paint and canvas.
    • I then organize a silent/shady auction for my painting, and secretly bid $1,000,000 for my own painting
    • Then I decide to not pay for it and at the same time I decide to retract the sale instead of opening it up.
    • On paper I have a $1,000,000 asset that has been depreciated by $1,000,000 which allows me to deduct $1,000,000 from my other taxes.

    So obviously this example was fraudulous. It’s possible that the expected revenue on the cases involving movies was estimated transparently and was fair, because of market forces.

    Maybe something more scummy was at play?

    Who knows.