Amicus Brief Filed in Support of Lee Storey/Doc Filmmakers
Posted: Jun. 1, 2011 Sign-in to Comment Bookmark and Share

Excerpt from "Notes from the Reel" - Summer 2011 - Documentary magazine

Dear IDA Community,

In a US Tax Court trial held in Arizona on March 9, Judge Diane Kroupa made a statement that, if memorialized in a ruling, will have a devastating impact on independent documentary filmmakers across the US. Judge Kroupa questioned whether a documentary could be “for profit,” since by its nature it is designed “to educate and expose,” and she invited the parties to present case law on the issue.

Judge Kroupa’s speculation came in a case in which the IRS argued that filmmaker Lee Storey could not deduct business expenses pertaining to her film Smile ’Til It Hurts: The Up with People Story because the primary purpose of her film (and by inference all documentary films) is to educate and expose, not to make profit, and that therefore documentary filmmaking is a not-for-profit activity. The IRS believes that if the person has no intent to make a profit, then the activity is a "hobby." Therefore, they claim that Storey owes hundreds of thousands of dollars in back taxes and penalties for the business deductions she took.

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. To support Storey, IDA has filed an amicus brief in the case, urging the US Tax Court to recognize that the production of a documentary film is, at its core, a “for profit” business such that business expenses are deductible for tax purposes.

By doing so we hope to ensure that all filmmakers receive the respect they deserve, and that the many sacrifices they make in the pursuit of their art and livelihood will not be made in vain.

Michael Lumpkin

Michael Lumpkin
Executive Director
International Documentary Association




Tags: Advocacy  
Lee Storey/Tax Court Trial

I'm no attorney, but I can't imagine the IRS has a legal leg to stand on in this case. There are thousands of for-profit educational enterprises in the US. What about for-profit K-12 schools (EMOs)? There are over 160 for-profit colleges and universities in the US, like the University of Phoenix and Academy of Art University. And then there's the seminar guru circuit: Tony Robbins, Wayne Dyer, Robert Kiyosaki, Donald Trump, et al., are all out there "educating and exposing", for Big Profits, and I'm reasonably certain they're deducting expenses. Is the IRS going after all of them too? Could anyone keep a straight face while claiming Michael Moore is not engaged in a profitable enterprise?

Unless this is a political hit, with a complicit judge, this should be a slam dunk for Lee Storey. I'm curious to know if anyone with a legal background can poke holes in this defense.

Link to the brief?

Without knowing more about the facts, it is hard to say much about Judge Kroupa's comments. Is there a link to the brief filed anywhere? Thanks


That is exactly what I was thinking. I think the whole wording of "by nature" is very dangerous. For example: is woodworking "by nature" a for profit or non-profit? How about a thrift store? How about live theater? The same could be asked about essentially any business. It all intends on the mission/legal construct of the entity. I have a registered LLC that holds different ventures but am also exploring the possibility of a 501c-3 for my documentary filmmaking. Much of that has to do with tax laws. You can also write off quite a bit of donations (of course that is only up to a certain amount) to non-profits. Now if there is no legal construct, it becomes more difficult to prove either way what the intent was/is. My advice for anyone (and I am not a lawyer) is to consult a small business organization for some insight. They typically do free consults. (If they are going to charge you, you are in the wrong place. You can always check out a university as well.)

I hope someone makes a documentary on this case. (It would be ironic if they didn't.) My suggestion is Brett Morgen! (Anyone who has seen "Chicago 10" is laughing right now.)