Tribune Co. said it received a $344 million tax refund after settling a dispute with the Internal Revenue Service in tax court. The media giant said the settlement, announced in June,
yielded a net cash payout of $286 million.
The company appealed a 2005 tax court decision disallowing the tax-free reorganization of legal publisher Matthew Bender, a former subsidiary. The $344 million represents a refund of federal income taxes and interest resulting from payments previously made for both the Matthew Bender transaction and a similar transaction completed by Times Mirror. Tribune inherited the tax dispute when it acquired Times Mirror, Matthew Bender’s former corporate parent, in 2000.
In 2005, Tribune disclosed that it was looking at a possible $1 billion bill for back taxes after the U.S. Tax Court disallowed the 1998 tax-free reorganization of Matthew Bender. At the time, Times Mirror sold Matthew Bender and a stake in another legal publisher to Europe’s Reed Elsevier Group for $1.6 billion, and sold health publications group Mosby Inc. to Harcourt General Inc. for $415 million.
Times Mirror reported gains of nearly $1.4 billion on the transactions, but asserted that because the units had been disposed of in separate tax-free reorganizations, it had no tax liability. The IRS disagreed, claiming that the deals were sales and should have been taxed in that manner.