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By Erin McManus
Oct. 3 — Tribune Media Co. is challenging a $182 million deficiency plus penalties from the 2009 sale of the Chicago Cubs to the Ricketts family ( Tribune Media Co. v. Commissioner, T.C., No. 20940-16, petition filed 9/23/16 ).
Tribune says the sale of 95 percent of its interest in the Major League Baseball team didn't result in an immediate taxable gain because the transaction was structured to comply with the partnership provisions of the tax code, according to its petition filed Sept. 23 with the U.S. Tax Court and a Securities and Exchange Commission filing in August.
The Internal Revenue Service disagreed with this characterization, saying in the deficiency notice issued to the company that the transaction was a disguised sale, resulting in Tribune realizing $740 million in built-in gains. The IRS erroneously reduced by $674 million Tribune's share of recourse liability in the partnership that held the Cubs—Chicago Baseball Holdings LLC, according to Tribune.
The IRS further erroneously increased Tribune's nonrecourse liability by $21.3 million and decreased its capital contribution by $696 million, according to the petition.
Tribune recently settled with the IRS, agreeing to $275 million in tax, penalties and interest from its 2008 sale of its 97 percent interest in Newsday to Cablevision Systems Corp. (181 DTR G-1, 9/19/16).
Tribune and the IRS declined to comment.
With assistance from Matthew Beddingfield in Washington.
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