A couple weeks ago documentary filmmaker Lee Storey won her case against the Commissioner of Internal Revenue after the IRS said she could not deduct expenses from her film, Smile ‘Til It Hurts: The Up with People Story. Since her primary job is that of a lawyer, the backwards thinking went – and because her documentary (despite making the rounds at some festivals in 2008 and her continued efforts to make the film a success) failed to become profitable – her filmmaking is nothing more than a hobby and deductions were not justified. See, if her documentary did turn a profit and if the success of her documentary allowed her to quit her day job to be an actual filmmaker instead of an aspiring filmmaker, then she could deduct those expenses.
Basically the message is this: If you make it big, you’re a club member and you’re set. If you don’t? WE. WILL. STEP. ON. YOUR. FACE.
OK, scary IRS people, I get you have a job to do. But picking on a struggling documentary filmmaker? That’s like Ebenezer Scrooge kicking Tiny Tim’s crutch away and – after the young lad falls on his face – shouting at him, “No crutches! You should not have had kidney failure!”
Couldn’t the IRS go after some real filmmaking villainy? Who was responsible for One for the Money? The Russians? North Korea? I don't know the answers to these questions, I only know someone needs to pay. Couldn’t they go after guys like Michael Bay who actually appear to treat filmmaking as “a hobby”? I don't know this for a fact per se, I'm just surmising based purely on what he puts on screen. Or more to the point, how about the accounting offices that said Coming to America – which made $288 million worldwide in 1988 (which I think adjusts to 80 gabillion in 2012) – somehow lost money (meaning they were able to stiff Pulitzer-prize winning columnist Art Buchwald after he successfully sued them, claiming the film was his idea)? Or the clowns who said Paramount suffered a loss with Forrest Gump ($660 million in ticket sales). Or maybe just about anyone who makes big Hollywood blockbusters these days.
The IRS has a job to do and it’s an important one. That is what makes this so irritating. They decided to focus on what is or is not a hobby for a struggling filmmaker instead of really focusing on how studios define “net profits”. To a degree, I’m sure their hands are tied. I do not claim studio accountants are engaging in illegal activity. I’m just saying it feels very, very illegal. And wrong. And what Lee Storey tried to do in regards to her taxes sounded very, very legal. And right. I get that studio accountants are just playing the hand they’re dealt. If the tax codes say one pair beats three of a kind, then one pair can beat three of a kind no matter who stupid that sounds. It makes it all the more shocking that time would be wasted on going after the likes of Lee Storey and her little movie. Her documentary may not have made it big, but her victory is a huge win for documentary filmmakers everywhere. Especially the Tiny Tims.