What is a "tax write off"?

A write off is a colloquialism that refers to reducing your effective taxed income. A more realistic example would be, let’s say you make $250k, but you’re self employed and spent $50k on business expenses like a car and office space. Then you can write off that $50k and only pay taxes like you made $200k.

I'm seeing a lot of complicated explanations so I'm gonna go with a simpler one.

Say you build a fence for somebody and they pay you $1000. You have to report that income to the IRS. Let's say the tax rate is 40% so they say "Well you owe us $400." But instead you provide them with receipts saying you bought $500 of supplies in the form of lumber, screws and such. You have "written off" your expenses and shown the IRS you really only made $500 so you only owe $200 in taxes.

If you write off 80 mil you're basically saying that you lost 80 million on an investment.

So let's say a different movie you made makes 80 million, and this one lost 80 million, you basically made zero money and shouldn't have to pay taxes.

you can't just write off anything you want. You only get to write off certain things, but at the end of the day, a tax write off is just a tax deduction for how much you need to pay, in the same way any normal person paying their taxes does. Just like with personal taxes, you can just reduce your tax liability down to 0 if you get enough deductions.

Corporations obviously work differently than for a normal person, but the same basic principle applies.

Edit: i suppose i should clarify - You can take deductions for investment losses. Normal people can even do this. What you're referring to would be a deduction along those lines, where you're "writing off" a loss on your taxes. If you invest $100 in stock, and sell when the value is $50, you took a $50 loss, and can deduct those loses from your tax burden, because you're required to pay taxes on 50 less dollars that year.

Kramer is that you?

A tax write off is also called a tax deduction.

So when you do your taxes and you need to pick between the standard deduction or itemized, that's picking if you want to write off the standard amount or try to find all the amounts that might apply to you.

The deductions, or write offs, reduce your income for tax purposes. So if you have 50k in taxable income, a 10k deduction will mean you're only taxed on 40k.

To get something you would call a discount, you would need a tax credit, which reduces the bill by some fixed amount.

10k write off: 100k income becomes 90k, 20% taxes are 18k.
10k credit: 100k income at 20% is 20k, less 10k credit is 10k is taxes.

Movie studios do complicated accounting to make it so the business that collects the money for showing the movie is often not the one that made the movie.
That means that often the movie is able to be described as a financial failure even though it made more money than it cost to produce.
Usually this isn't done for tax purposes, because the IRS will generally get their cut regardless, since if the movie makes money, someone is collecting it.

Entertainment often pays actors, writers and such royalties based on a proportion of profits. By manipulating which specific entity actually shows the profit, they can manipulate how much royalties they have to pay.

Colloquially, the term "tax write off" has been used to mean one of two things: 1) a tax deduction for expenses against taxable income, or 2) a tax deduction due to a partial or total loss, also against taxable income. In both cases, it's a deduction from the amount of income which the tax rates would apply toward. To be clear, neither would be a tax credit, which is a form of direct reduction in the tax amount to be paid.

The first category includes business expenses, such as amortization of the cost of office furniture, usually over a number of years. This can also include expenses which the government deems especially worthy, such as mortgage interest expenses in the USA.

The second category is for calamities, economical or natural disaster related. Someone losing their coastal home due to land erosion could write off their home, because that asset is now worthless. Or an investor can write off their shares in a film production, if the main actor turns out to have done awful things and no one wants to work on the film anymore. In this category, an asset has been involuntarily or voluntarily given up, with no hope of a recovery, and so the tax code usually allows this to be a deduction against income.

To be clear, a taxpayer cannot just randomly designate stuff to write off. The first category is wholly defined by policymakers, and the second category requires an irrevocable declaration of the asset's worthlessness, such that a future (unlikely) recovery will be a new, separate taxable event.

(n.b. my context is USA taxes)

You clearly got your answer now, but I really wanted to see that Coyote vs Acme movie

Overly simplistic and assuming you are talking about the US: So you spent 80M making a movie but for whatever reason it never makes it out of production, you never see any return on this investment. But overall this year you made 100M from something else. When you do your taxes, you can "write off" this 80M spent as a loss, so you only have to pay taxes on the remaining 20 million. It doesn't deduct 80M from taxes owed.

You've got some answers as to what specifically it is, but I'd like to chime in and remind everyone that the US tax system is maliciously complex and designed to fuck over people like you and me and help the obscenely wealthy.

Corporate tax rate is 21%, so by subtracting $80 million from their income they get a $16.8 million discount.

I understand it to mean what's called a "deduction". This is an amount that you are allowed to claim that reduces your taxable income, which reduces the tax you pay. "Writing it off" means claiming the deduction.

Generally speaking, to be a valid deduction, an expense must be necessary and ordinary to running your business. In practice, a valid deduction is whatever your tax authority decides is allowable.

I am answering from the point of view of the Canadian income tax system, but what I describe here is pretty common throughout the world.

Here you go: https://en.m.wikipedia.org/wiki/Hollywood_accounting

A tax write-off is something that you 'lose' in order to offset what you owe in taxes. If you donate a car to a charity, you've losing the value of that car - because you aren't selling it, and thus that value 'lost' gets calculated against what you owe the government.

Going to add to this, the confusion comes from people saying something is a tax wire off as being a good thing. That confusion comes from the fact that a tax write off is essentially a "discount" compared to paying for something out of your own pocket post tax. You're essentially buying it for whatever percent cheaper you tax rate is. This is good if it's something that you gain value from, but bad if it's something like a wasted investment (though that gets complicated when you start actually assigning percentages to an investment's potential return as you hedge it, that's so far outside of my wheelhouse that it might as well be on the moon).