[derivative7]

If I pay 25% marginal income tax and I make a profit of 200 million dollars, I get to keep 150 million. If instead I decide to buy the Mona Lisa for 200 million dollars, and burn it I walk away with nothing but the satisfaction of not have given one cent to the government. Please tell me how my evil mastermind plan to burn the Mona Lisa works anyway?

[nerdponx]

Buying the Mona Lisa for $200m is not at all the same thing as netting a $200m profit.

Better analogy: you buy a big museum collection that contains some lost Rembrandt paintings, widely regarded as his worst, but still considered valuable because it's Rembrandt. You think you might have a hard time selling them, so you look up their original purchase price and find that it was $1 million, so you burn them instead and claim a $1 million writeoff, for a guaranteed $250k decrease in taxes for essentially 0 additional cost, resulting in $250k of extra profit.

[prepend]

This example doesn’t work. You’d only be able to deduct your cost to buy them, not their potential value.

It only works if you pay $1M now and then years later burn them to offset a different $1M in income. But that would still be stupid as you’re better off selling them for $1M than burning.

I don’t think you’re thinking the math through properly.

Studios aren’t writing these off because they are stupid or scheming. They are writing them off because they can’t sell them.