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Squid will face off against a relatively new directing talent – George Clooney, whose Edward R. Murrow drama Good Night, and Good Luck, scored four nominations, including best feature and director.
Other four-time nominees include Capote, starring Philip Seymour Hoffman, the "gay cowboy movie" Brokeback Mountain, starring Jake Gyllenhaal and best lead actor nominee Heath Ledger, and Tommy Lee Jones's The Three Burials of Melquiades Estrada.
Jeff Daniels and Laura Linney, who play a couple whose marriage is failing in Squid, received acting nominations, as did Jesse Eisenberg, who plays the couple's son.
Dawn Hudson, executive director of event organizer Film Independent, said of the emotional film, which is set in Brooklyn in the 1980s, "We don't see an honest film about divorce from a kid's point of view."
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Dillon's Crash costar, Terrence Howard, picked up a lead acting nomination – but for a different film: Hustle & Flow. And Desperate Housewives star Felicity Huffman is up for lead actress in Transamerica, about a transgender man who becomes a woman.
Last year, the wine country comedy Sideways swept the Spirit Awards, winning all six categories in which it was nominated. (The next day, it won just one of the five Oscars for which it was nominated – for adapted screenplay.)
The Spirit Awards, which are traditionally held the day before the Oscars in Santa Monica, will air live on the IFC channel March 4.
