Is Your Documentary Film a Hobby? A Judge Thinks So

The top 100 documentaries produced over the last few year all made over $1 million. Yet, if the IRS accepts a judge's ruling in an Arizona tax case, documentaries would be classified as a "hobby" and therefore treated as a not-for-profit venture, meaning you would not be able to deduct the expenses you incurred making the film, and even might be liable for back taxes on past documentary projects.

In a case involving a film by Lee Storey, Judge Diane Kroupa stated that documentaries are produced "to educate rather than make money."

Which of course means Harvard University is a hobby.

The International Documentary Association's executive director Michael Lumpkin expressed his organization's dismay:

"The potential affirmation of Judge Kroupa's statement could have a serious impact on documentary filmmaking in America by creating federal case-law precedent that could be used against filmmakers, bringing about audits and demands for back taxes because of a characterization of documentary filmmaker as meriting nonprofit status."

I've made three documentaries because you can make money doing so. According to the website The Numbers Charles Ferguson's film Inside Job has grossed over $10 million in theaters and DVD sales on a budget of $2 million.

That's hardly a hobby. That's a business. A good business. Ask Robert Greenwald if his fine documentary film career is a hobby.

The IDA filed an amicus brief in the case. The judge will reply in a few weeks. If you are a documentarian, you should pay close attention.

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