Writing for Filmmaker magazine, the documentary director Paul Devlin (BLAST!) discussed the experience he and other filmmakers have had lately with IRS audits. Essentially, tax collectors have been asking documentary filmmakers to make the case that their films — which often end up being money-losing propositions due to the current climate for distribution and exhibition — are a business endeavor and not just an expensive hobby.
One of the lessons Devlin has learned is that it doesn’t pay to let on that you’re too enthusiastic about your passion projects. If the IRS determines that you’ve become a filmmaker “to educate and to expose” rather than out of a profit motive, you could find your creative work downgraded to “an activity not engaged in for profit.” That means that any losses you may have claimed against other income on your tax return are voided. You could end up owing enough in back-taxes to put you out of business as a filmmaker permanently. Devlin remembers his feelings well.
I was outraged. Filmmaking was my pasttime? Clearly, the agent had no idea how much work goes into making an independent film. I did my best to describe the grueling shoots in far away places, the all-night edits, the endless fundraising and marketing, and the constant efforts to sell, sell, sell. Did he really think I had no interest in making money?
The full story, which includes some advice for other filmmakers who may be put in the position of defending their unprofitable films as a legitimate business endeavor, is lengthy but well worth reading. www.filmmakermagazine.com/news/2011/07/why-filmmaking-cannot-be-a-hobby/.
Topics: Blog documentary filmmaking
Did you enjoy this article? Sign up to receive the StudioDaily Fix eletter containing the latest stories, including news, videos, interviews, reviews and more.
Leave a Reply