A federal appeals court said that the former
owners of an Arizona broadcasting company owe $15 million in taxes on
the 2001 sale of their business. A three-judge panel of the 9th U.S. Circuit Court of Appeals said
last week that deals between Slone Broadcasting Co.
and another company that
assumed Slone’s tax liability, only to claim later that it did not have
assets to pay the taxes, had “no legitimate economic purpose other
than to avoid paying the taxes.” It’s the second time the appeals court has overturned rulings by a tax court, which sided previously with the broadcaster. Slone Broadcasting Co.
was an Arizona-based company with a handful of radio stations around Tucson, according to an archived web site of the now-defunct company. Among the company’s call signs were KIIM-FM, KCUB, KTUC, KHYT and KOAZ.
Its owners agreed to sell their assets in 2001 to Citadel
Broadcasting Co. for $45 million, realizing a capital gain of $38.6
million that incurred federal and state taxes of about $15.3 million,
according to court documents.
Before that sale closed, Slone was approached by Fortrend
International with an offer to buy all of Slone’s shares and restructure
the company “to engage in the asset recovery business.” Slone
investigated the deal, hiring an attorney and experts who said Fortrend
was legitimate and “represented by well-regarded accounting and law
firms.” But when Slone officials asked how Fortrend would reduce their tax
liability, the company refused to answer, saying its methods were
proprietary but reassuring the Slone shareholders. On Dec. Read more from tucsonsentinel.com…
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