Sure. Qualified business expenses are deductible. Personal expenses are not deductible, and neither are losses suffered because you willfully destroyed your own property. That is true for businesses as well as individuals.
Right, and the studio is deducting all the resources it spent making the movie. If you decide to invest in a bunch of money into developing a product, and then not commercialize it, all the r&d money that went into it is still deductible. It gets tricky when amortization and accruals are involved, but in the end it's approximately the same principle.
