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1. Santa Claes 🇸🇪🇭🇰🎅 (clacke@libranet.de)'s status on Tuesday, 22-Aug-2023 05:25:44 UTC Santa Claes 🇸🇪🇭🇰🎅

   How do the tax structures work that make it profitable to have less revenue? I don't get these "they killed it so they could deduct it" things.

   In the simple taxation situations I have been in, if you have 16% corporate tax and you have 200 dollars revenue and 100 dollars deductable cost, after tax you have 84 dollars profit.

   If you cut that revenue, woohoo, you have negative 100 dollars that can cancel out some other revenue for tax purposes, but like. You're saving 16 dollars in tax compared to if you didn't have that negative 100, but you're missing 168 dollars in profit that you would have had if you kept the revenue.

   What's the maneuver that folks like Disney are doing?

   • Santa Claes 🇸🇪🇭🇰🎅 (clacke@libranet.de)'s status on Tuesday, 22-Aug-2023 05:25:42 UTC Santa Claes 🇸🇪🇭🇰🎅

     in reply to

     I'll explain to those who haven't subjected themselves to accounting:

     When you do your accounting, every plus needs to have its according minus.

     What this means is obvious when you have revenue and expense, but you also have assets and liabilites and ways to carry figures from one year to the next.

     Let's ignore the exotic parts for now (my "retained profit" is negative when I earn a profit whaat).

     Let's also ignore for now the Italian rules from the 1200s that everything is just a different type of plus. That's just because mathematicians hated negative numbers until the 1800s.

   • Santa Claes 🇸🇪🇭🇰🎅 (clacke@libranet.de)'s status on Tuesday, 22-Aug-2023 05:25:43 UTC Santa Claes 🇸🇪🇭🇰🎅

     in reply to

     • Your friendly 'net denizen
     @cstanhope Aha! Yes, writing down an asset makes more sense. It's a loss of unrealized value and doesn't come from cash flow.
   • Your friendly 'net denizen (cstanhope@social.coop)'s status on Tuesday, 22-Aug-2023 05:25:44 UTC Your friendly 'net denizen

     in reply to

     @clacke This is the best explanation I've seen so far.

     https://www.vox.com/culture/23778245/max-disney-paramount-remove-delete-streaming

   • Santa Claes 🇸🇪🇭🇰🎅 (clacke@libranet.de)'s status on Tuesday, 22-Aug-2023 05:30:32 UTC Santa Claes 🇸🇪🇭🇰🎅

     in reply to

     When you make a big investment it may be misleading to just say we spent this money, so we "lost" money this year. Instead you say we spent this money, but it wasn't a loss, see, now we have this nice big machine in our factory instead.

     That's an asset. Instead of money going from our bank account to Expenses, the money is going from our bank account to maybe some Equipment account in Assets (the bank account itself is also in Assets).

     Then, every year as the machine creates revenue you also dole out a bit of expense for the money that went into the machine. Money moves from Assets to Expenses. So if you buy a big machine every five years, now from an accounting perspective instead of taking a big expense every five years you are taking a fifth of a machine of expense every year, deferring the expense to the matching revenue and avoiding spikes in the profit vs loss.

   • Santa Claes 🇸🇪🇭🇰🎅 (clacke@libranet.de)'s status on Tuesday, 22-Aug-2023 05:33:16 UTC Santa Claes 🇸🇪🇭🇰🎅

     in reply to
     In this case the "machine" is their asset the TV series. As it may not be making enough revenue to cover its deferred expense, they'd prefer to take the expense now and get cash in the form of avoided taxes, rather than drag it out.
   • Santa Claes 🇸🇪🇭🇰🎅 (clacke@libranet.de)'s status on Tuesday, 22-Aug-2023 05:40:58 UTC Santa Claes 🇸🇪🇭🇰🎅

     in reply to
     > Then, every year as the machine creates revenue you also dole out a bit of expense for the money that went into the machine. Money moves from Assets to Expenses.

     
     And money moves from Income to Assets as people buy your product. It all evens out. On the balance sheet your machine turns into money in the bank, on the profit/loss sheet your expense is paired with income.

   • Ton Zijlstra (ton@m.tzyl.eu)'s status on Tuesday, 22-Aug-2023 08:10:48 UTC Ton Zijlstra

     in reply to

     @clacke as I always tell my colleagues everything needs to work out to zero in total. Nice little factoid about not using negative numbers!

     Santa Claes 🇸🇪🇭🇰🎅 likes this.