This 2005 tax case involved three movies with Ninja in the title. It is also the only federal case with both “ninja” and “zombies” in the opinion – See ZombieLaw: “Astro Zombies in Tax Law” for a prior writeup of this case: Santa Monica Films v. IRS.

SANTA MONICA PICTURES, LLC, PERRY LERNER, TAX MATTERS PARTNER, * Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent CORONA FILM FINANCE FUND, LLC, PERRY LERNER, TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Nos. 6163-03, 6164-03
UNITED STATES TAX COURT
T.C. Memo 2005-104; 2005 Tax Ct. Memo LEXIS 104; 89 T.C.M. (CCH) 1157

Opinion by Judge Michael Thornton, filed May 11, 2005

The following film titles and development projects were listed in Schedule 1.6(b) of the exchange and contribution agreement as assets of SMHC:

57. Ninja Hunt

58. Ninja Showdown

59. Ninja Squad



All three are listed by the Court as 1987 movies (though IMDB suggests 1986). The Opinion also reveals that they were originally in the “EBD film library”. They were then sold. The Court notes difficulties in determining the market price of movies because of issues finding comparable films. For comparison noting the movie “Teenage Mutant Ninja Turtles”.

in 1993, New Line sold 200 features to Turner Broadcasting for $ 500 million ($ 2.5 million per title); … in 1997, Orion/Samuel Goldwyn sold 2,000 features to MGM for $ 573 million ($ 286,500 per title).

[footnote #135]:
The film library that New Line sold to Turner Broadcasting included the film titles: “Teenage Mutant Ninja Turtles“, “Misery”, and “City Slickers”. The film library that Orion/Samuel Goldwyn sold to MGM included the Academy Award-winning film titles: “Amadeus”, “Platoon”, “Dances With Wolves”, and “The Silence of the Lambs”.

The point is that these movies are not particularly comparable. The transactions involved shifted the losses from failed movies and were deemed to be a tax shelter. The Court here upholds the IRS ruling over the studio’s arguments.

This is, of course, not the first NinjaLaw Federal case to mention the Teenage Mutant Ninja Turtles, nor to mention them even though they are not necessarily relevant to the particularities of the case. Here in 2005, the Turtles movie is listed among a number of modern classics and blockbuster successes.

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