This is more of a tax/investment type question rather than an “arts” question…
Could someone explain this “tax loophole” a bit?
I don’t get it. How do they “pull out” of an investment like that? And is it something that is uniquely exploited my film investors or is it a more widespread practice with other forms of investments as well?
I am speculating that it’s sort of the following:
Multi-millionnaire rich dude/dudette invests $1 million in a movie.
Before movie makes profit, dude/dudette severs all connections to the film.
This results in a $1 million dollar loss. (Even though film goes on to earn lots and lots).
The $1 million loss offsets some tax stuff – like brings them into a different bracket or something.
Does the loss offset something? How does the multi-millionnaire due/dudette benefit from this? How the heck does the whole “pulling out” process work? Do they somehow “uninvest” the funds? How? Or is it like I speculate above and they lose the money they invest?