There was an extensive discussion of this on the AMIA listserv and it may not be as outrageous as it seems. No on there had all the details, but there was some question as to exact nature of the expenses. Here is one of the detailed posts.
*I think the issue here is whether Lee can deduct losses against OTHER income. I believe you can always deduct hobby losses against hobby income. But Lee might have been trying to offset her film production expenses against her other income. Without knowing the facts in this case, it is not hard to imagine a filmmaker-lawyer/doctor/CEO/investor with significant income from other sources running up costs on a film production (buying expensive cameras, traveling to festivals--and spending much more on production and promotion than a filmmaker who is actually profit-motivated, but doesn't have significant income from other sources, might spend) and a judge looking at that situation and seeing someone who is not really trying to make a profit from the film, but rather is trying to get a tax break against other income from activities that are fun and possibly a little overboard in the circumstances. * *I took a quick look at the IRS website and didn't see anything suggesting that the IRS considers "educating and exposing" is a motivation that would make an activity a hobby and not a business, so I think the judge might be off base with that comment. It seems like the test is, basically, whether you are engaged in the activity with the intention of making money. Of course, doing something for fun, or to educate, and doing something for money are not mutually exclusive. Why do people work? Why do people have hobbies? Answering that second question is like a Rorschach test of how you see your job. A hobby is fun? Then your job is a drag. A hobby educates and informs? Then work is about misleading people so that they buy something they don't really need and make choices that aren't in their best interests. * *Anyway, even if the IRS says your filmmaking is only a hobby, the only limit is that you can't carry over all your losses to get a break on your income from your trust fund or your law or medical practice or your CEO job (you do get to carry over some expenses, but there are limits). Even then, I believe if you are getting money from selling DVDs or from grants to pay your salary while making films, you will still be able deduct your costs, because you can deduct hobby expenses from hobby income (...definitely consult your own accountant or tax lawyer and don't rely on tax advice from semi-anonymous people on the Internet!). In any event I think it is important to have this limit because, without it, you'd create a huge tax incentive for people with a lot of wealth from other sources going crazy making and promoting docs that nobody really wants to see and having the tax base eroded as a consequence (i.e., having working people who disproportionately bear the tax burden subsidize that activity). Without this tax rule we might see a lot of 3D docs at festivals in great vacation spots about how great investment bankers are!"* *Kate Coe * On Fri, Jun 10, 2011 at 9:41 AM, Shoaf,Judith P <[email protected]> wrote: > I am incredulous. > > Educational work and reporting are not tax-deductible because not for > profit--by definition? > > > > Judy > > > > > ------------------------------ > *From:* [email protected] [ > [email protected]] on behalf of Carleton L. Jackson [ > [email protected]] > *Sent:* Friday, June 10, 2011 8:43 AM > *To:* [email protected] > *Subject:* [Videolib] Another legal case worth comment? IDA Amicus Brief > > VideoLibers: > > Just in case some of you are not aware, here is another (finally > non-copyright) case that may be worth talking about. > > Amicus Brief Filed in Support of Lee Storey and Documentary Filmmakers: > > * > http://www.documentary.org/news/amicus-brief-filed-support-lee-storey-doc-filmmakers > *<http://www.documentary.org/news/amicus-brief-filed-support-lee-storey-doc-filmmakers> > > We may need to show some support, sometime. > > Carleton > > Carleton L. Jackson > Librarian, Nonprint Media Services Library > University of Maryland Libraries > 0300 R. Lee Hornbake Library > College Park, Maryland 20742-7011 > *http://www.lib.umd.edu/nonprint/information/cjackson.html*<http://www.lib.umd.edu/nonprint/information/cjackson.html> > 301-405-9226 voice / 301-314-9419 fax > *[email protected]* <[email protected]> > > > > > > > > > > VIDEOLIB is intended to encourage the broad and lively discussion of issues > relating to the selection, evaluation, acquisition,bibliographic control, > preservation, and use of current and evolving video formats in libraries and > related institutions. It is hoped that the list will serve as an effective > working tool for video librarians, as well as a channel of communication > between libraries,educational institutions, and video producers and > distributors. > > -- Jessica Rosner Media Consultant 224-545-3897 (cell) 212-627-1785 (land line) [email protected]
VIDEOLIB is intended to encourage the broad and lively discussion of issues relating to the selection, evaluation, acquisition,bibliographic control, preservation, and use of current and evolving video formats in libraries and related institutions. It is hoped that the list will serve as an effective working tool for video librarians, as well as a channel of communication between libraries,educational institutions, and video producers and distributors.
