(1977)
Carl Pellman and Renate Pellman v. COMMISSIONER
This is a tax dispute case involving the investors who acquired United States distribution rights to the 1977 Israeli movie ‘Prisoner in the Middle’ starring David Janssen. The case from the tax court lists some actual financial information pertaining to the movie — including the budget, distribution expenses, revenue that the film earned and the tax write off that the investors recorded. Below is a brief breakdown of the expenses related to ‘Prisoner in the Middle’:
The budget for ‘Prisoner in the Middle’ was $1 million.
US rights were sold for $1,250,000
The original plan for the US market was to premiere the movie on TV, but that was altered after the investors believed they could earn more from a TV sale if the movie had a theatrical release. $100,000 was allotted for marketing and distribution for theatrical. The film would need to generate $2,000,000 in revenue from theatrical sources and $500,000 in revenue from television distribution in order to cover the balance of the purchase price. The theatrical run was a disaster and returned no income after distribution expenses to the investors.
The lifetime revenue of ‘Prisoner in the Middle’ between both theatrical and TV was $453,628 by June 30, 1984.
Read the full court report below for further information.