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by Dana Harris (Updated 59 minutes ago)
"A still from "Smile 'Til It Hurts," the documentary that inspired the IDA's battle against the IRS.
With the International Documentary Association doing battle with the IRS, it’s easy to believe only documentary filmmakers face the threat of their films being considered hobbies—and therefore nonprofit activities.
That would be a mistake.
“We didn’t raise (independent fiction filmmakers) in our brief because it seems like it would muddy the waters,” said attorney Michael Donaldson, who is representing the IDA as a “friend of the court” in the case. “[But] the logic of this case applies equally to documentaries and fiction films.”
That’s because if you’re an independent filmmaker of any kind, the odds are unkind. Financing a film is a speculative and deeply optimistic act; very few films receive meaningful distribution, and on and on.
Independent filmmakers take these daunting facts as articles of faith. The IRS, not so much.
That’s because a lot of independent films look pale and sickly when placed in the light of the IRS’ nine-factor test (see related article). It helps agents judge if an activity is intended for profit; no single factor, or even a combination of factors, automatically deem an activity as not for profit.
However, many facts about independent filmmaking—that it can be years before you see any revenue, that filmmakers often have another job, or have never made a film before—could make it look like a very bad business, one that’s so riddled with false hope, long odds and cockeyed optimism that you can’t call it a business at all. And at that point, it’s at risk of being classified as a hobby...."
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