A key detail of companies being able to "hide profits" is the ability to relocate funds in to other funds to use as "business expenditures"
Things like sets, productions, renting, or even buying certain clothes for props could be considered a business expense.
This was an important factor that supported the start-up of Hollywood studios and maintaining their incredibly high business costs.
This was also a reason James couldn't exactly use up much of the money he had made.
Most of his money had been with the studios or productions that he had worked with.
James had come to an agreement with them to pay him in increments over a period of time. But, James was technically entitled, they were just handling it to make it seem as if was being slowly paid back. They would also incur James' salary as a temporary debt or an expense.
Companies were more than happy to work with James to "withhold" payment as he was also classified as an independent contractor in many of these situations.
This would work out for both parties as in all-in-one payment could lead to giving back more in taxes than what was actually made.
Paying everything upfront would also dampen the opportunity that most companies would have at reinvesting their profits into other ventures, similar to what James was trying to do.
After all, most studios don't have much liquid cash on-hand that could just be used to pay everyone out all at once. And, most of the cash they could use as expenditures would go to their employees who they were entitled to give a salary to. And salaries, generally, cannot be "withheld" or paid out overtime.
People like James, who were also independent contractors, were welcome in this case.
Because as soon the company payed James what he earned, they would have to pay a certain amount in taxes as well along with it. The paperwork involved in it, forcing them to reveal other part of their actual earnings as well.
The reason James wanted companies to withhold part of his payment is because it was still 1981, where the people in James' tax bracket were being hit with a 70% income tax rate.
It was only in the year 1982 that it would be lowered to 50%.
James didn't know the exact date that income tax was lowered or that it was even going to happen soon, so he had been hoping to put off paying a majority of what he earned until that time came.
Unfortunately for James, Dubois had already paid him most of what he made for the first movie, Alien. They had put it off for a year and half, but due to their restructuring and sudden increase in work they got audited and had to sort out most of their financials.
James thought DuBois could put off paying him for awhile, give the assurances Catheryn gave him, but one day she said the IRS came and paid him everything in full that was included in the contract.
The IRS always finds you, I guess.
This is the main reason James was starting to become more proactive in trying to invest his money into something. Be it land, stocks, or infrastructure.
James also thought about buying up IPs or movie rights from books he knew would get good movie adaptations.
Hell, he was even considering taking out a loan from the bank, investing it all, just so he could use the extra money as a tax write-off, just to avoid paying taxes. Although, that would put him into debt. That was how bad it was getting.
But, using that type of strategy felt very scary for James given the ongoing bank crisis that was going on, mixed with his fear of not being able to pay it back.
Taxes were becoming a serious problem for James, and he really didn't want to lose any of his hard earned money.
James' current allot profit from selling his scripts and directing gave him a decent profit, but most of his income came from the box office percentages. Total earnings would equal to around 10 and half millions dollars.
But, James wasn't really sure anymore how much of that he actually still has and how much of it would have to go to taxes.
Because, sure enough, there are land taxes that he has to pay, but all the expenses that came with the investment, such as construction, are definitely tax deductible.
Then there are stocks, which he just currently left a lump sum to a trusted hedge fund who he told to put it all into the DJI, otherwise known as the Dow Jones Industrial Average.
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While James understood the reason he pretty much HAD to invest his money, it still worried him and made him uncomfortable.
James felt slightly as if he was "wasting" his money, even though this was the best way to make use of it and actually make a return on his money, instead of letting it go to waste to the IRS.
Right now, James was feeling odd seeing as how he had never actually seen his money, yet he had spent almost all of it.
Now, his money was somewhere else in the void, up in smoke. Instead, James was left with a half-constructed new home, several foundations for his storage facilities(?), and two skeletons of his future office buildings.
The buildings and his stock investment in the DJI was all he had to show for effort over the past 4 years. All of his toil was now interpreted in something which the evaluation of which could vary from person to person. Who's to say his buildings were going to be worth anything? Or that the DJI was going to go up?
"Oh, well, they ARE going to go up. Why am I so scared?"
The buildings WILL appreciate overtime and the DJI IS going to go up. There is no doubt about that, I should know. I'm the only person in the whole world who does actually KNOW, not just think.
James could see why it was so scary for new businesses. You really had nothing to go off to see whether you would be successful or not.
James considered himself lucky, at least he had the future.
"I should get started on my next movie."