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Documakers fight court’s ‘not for profit’ view

IRS case centers on 'Smile' business expense claims

The filmmakers behind the doc “Smile Til It Hurts: The Up With People Story” are pushing back against a tax court’s notion that they’re not out to make a profit.

The U.S. Tax Court is questioning the deduction of business expenses from Lee Storey’s docu. The IRS had challenged her deductions of business expenses — amounting to more than $311,000 after interest and penalties — because the government agency contended that her business was not carried on for profit.

The Intl. Documentary Assn., Film Independent, National Assn. of Latino Independent Producers, Women Make Movies, National Alliance for Media Art and Culture and the University Film and Video Assn. filed an amicus brief challenging Judge Diane Kroupa’s doubts that a documentary could be for profit.

“I’m also intrigued by the concept of a documentary. By its very nature, a documentary to me means that it’s not for profit. You’re doing it to educate,” Kroupa said at the end of a hearing on the case in March.

The orgs fear a precedent could be set that would hinder the documentary business.

“The fact that documentaries are generally made to appeal to hearts and minds rather than fists and loins does not diminish the intent of their creators — which is to say, the very same intent as creators of any kind of mass entertainment: reaching a maximum number of potential eyeballs,” documaker Eddie Schmidt, president of the Intl. Documentary Assn., said in a letter included in the brief.

The brief was prepared by Michael Donaldson and Christopher Perez of Donaldson & Callif.