Lawsuit Features Accounting Practices of a Nicolas Cage Film
by AccountingWEB on
By Ken Berry
Nicolas Cage has faced plenty of tax troubles in the past. The IRS has been chasing after the renowned actor for tax debts for years. According to the Business Insider, he currently owes over $14 million. Now a new lawsuit is targeting the accounting practices of one of his films.
Cage starred in the Bad Lieutenant: Port of Call – New Orleans, a crime drama released in 2009. The film garnered some critical acclaim but wasn't a success at the box office. According to an article posted on December 9 by The Hollywood Reporter, Polsky Films, a film production company founded by brothers Alan and Gabe Polsky, filed a lawsuit in Los Angeles Superior Court against Nu Image and First Look Studios.
Here's the gist of what the complaint says: Polsky Films spent $1.3 million to finance and advertise the movie for domestic distribution. As part of the financing agreement, the two studios were required to pay all U.S. proceeds from the film into a separate bank account. The agreement limited deductions to home video packaging, freight, and delivery expenses.
Once the funds were funneled into the bank account, the proceeds were supposed to be distributed based on a specific plan. Besides reimbursing its own prints and advertising (P&A) contributions, Nu Image wasn't permitted to pocket any money until residuals, bank financing, and the Polskys' own P&A contributions were recovered.
But that's not what happened according to the complaint. The Polskys say that the studios failed to properly establish the collection account, and exhibitors and licensees didn't pay proceeds into it. Instead, they allege that expenses were improperly deducted, proceeds weren't disbursed, and the funds weren't accurately and truthfully accounted for.
Avi Lerner, head of Nu Image, and Trevor Short, former CEO of First Look Studios, were named as codefendants in the complaint. The lawsuit also alleges that the defendants fabricated P&A expenses for their own benefit and to the detriment of the plaintiffs. The Polskys are demanding compensatory damages and, as a result of the breach, are also seeking to be awarded the distribution rights to the film.
You may like these other stories...
The tax-filing season got off to a slow start because the IRS said it needed more time to gear up for this year’s returns. But now the pace has picked up considerably.About 40 percent of the returns expected to be...
Tax preparers have completed a lot of returns since the season began and will complete a lot more before April 15 – but that's just the beginning for many accountants and their clients. In the weeks and months that...
To read more articles by Eva Rosenberg, MBA, EA, click here and check out the Talk to TaxMama archive.Once upon a time, tax storefronts and offices in primarily non-English-speaking communities were able to make a very nice...
Upcoming CPE Webinars
BAR is an acronym for: Boundaries, Authority and Role. This simple tool will provide participants with a solid understanding of leadership essentials to improve their performance.
This material is designed to provide a start-to-finish overview of how to plan and complete high-quality small audits efficiently.
In this session Excel expert David H. Ringstrom, CPA shares numerous techniques that you can use to work with charts more efficiently.
Key Accounting and Reporting Issues for Nonprofits No. 1: Overview and Statement of Financial Position
This material focuses on non-profit organizations organization, accounting and reporting.