Skip to comments.Why We May Help Pay for Tribune to Unload the Cubs
Posted on 09/22/2009 5:54:31 AM PDT by La Lydia
The Chicago Cubs aren't going to win anything this year despite having one of baseball's largest payrolls. But their bankrupt owner, Sam Zell's Tribune Co., may be about to hit a home run -- at your expense. Zell...is trying to unload the team in a deal that would divert almost $300 million from taxpayers to the creditors of Tribune...The proposed Cubs deal, involving a "leveraged partnership" using lots of borrowed money, is so aggressive that a leading tax expert, Robert Willens expects the IRS to challenge it...
Zell, who took over Tribune in late 2007 and put it into bankruptcy protection a year later, turned out to be too clever for his own good -- or his creditors' good. He obsessed over sheltering Tribune's post-buyout profits but buried the company in so much debt -- $13 billion, just as the newspaper business fell off a cliff -- that there were no profits to shelter.
Now Zell is trying to get around the problem he created when he converted Tribune from a standard C corporation to an S corporation to avoid taxes. Firms making that switch owe corporate gains taxes if within 10 years of the change they sell assets, such as the Cubs, in which they had "built-in gains..."
By my estimate, Tribune would have about a $720 million gain -- the $740 million, less 95 percent of the $21 million Tribune paid for the Cubs in 1981. At a 40 percent federal-state combined rate, the gain would generate about $290 million in taxes. Instead, that money would go to Tribune's creditors...
(Excerpt) Read more at washingtonpost.com ...
Milton Bradley might help?
call your congressmen
Maybe they should buy a bank. Then they will have the ultimate welfare queen marriage between the biggest welfare queens around... banks, professional sports teams, and now the newspaper racket.
Why would Warren Buffet’s tip sheet do a big splash on a standard tax arb? Zell must have po’ed the wrong people in DC.
The writer of this has railed against Zell on numerous occasions.
clearly the newspaper people who own the Pittsburgh Pirates were not smart enough to think of this...
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