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GOOD THING THEY DUMPED SAMMY SOSA

September 27, 2005

The Tribune Company today lost a Tax Court case with stakes that dwarf even a George Steinbrenner payroll. The Court ruled that the company, owners of the woebegone Cubs, must recognize a $1.3 billion gain on the 1998 sale of legal and tax publisher Matthew Bender. That means the Trib will have to pony up about $551 million, plus interest, unless it gets the case overturned on appeal.

While I haven't had time to analyze the transaction, which apparently was structured by Price Waterhouse, the Tax Court ruled that the deal failed to qualify as a Sec. 368(a)(2)(E) reverse subsidiary merger. By failing to achieve tax-free reorganization status, the transaction ends up being a taxable stock sale similar to the pending Maytag deal.

More on this after I get to spend more time with the 135-page opinion.

Link: TRIBUNE COMPANY, AS AGENT OF AND SUCCESSOR BY MERGER TO THE FORMER THE TIMES MIRROR COMPANY, ITSELF AND ITS CONSOLIDATED SUBSIDIARIES, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

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Comments

I can't get over the irony.

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