The part I think you are missing is that they didn’t write off the entire cost of the movie. They sold the rights to the movie for less than it cost to produce, and wrote off the difference of the sale price and the cost of production. This is a normal feature of the tax system. If you buy a stock for $15 and sell it for $10, you only have to pay tax on the $10 you sold it for, you get to write the $5 off as a loss. If a company spends money on operation, they don’t get taxed on that cost. If a company makes 2 million dollars, but to do so they had to pay their employees a total of 1.5 million dollars, the company itself only pays taxes on the $500k.