Tribune Company v. Commissioner, Docket No. 17443-02.

• Citation: 91 T.C.M. 678
• Decision Date: 26 January 2006
• Docket Number: Docket No. 17443-02.
• Parties: Tribune Company, as Agent Of and Successor by Merger to the Former the Times Mirror Company, Itself and its Consolidated Subsidiaries, v. Commissioner.
• Court: U.S. Tax Court

91 T.C.M. 678

T.C. Memo. 2006-12

Tribune Company, as Agent Of and Successor by Merger to the Former the Times Mirror Company, Itself and its Consolidated Subsidiaries, v. Commissioner.

Docket No. 17443-02.

United States Tax Court.

Filed January 26, 2006.

Joel V. Williamson, Roger J. Jones, Gary S. Colton, Jr., Jeffrey Allan Goldman, Matthew C. Houchens, Daniel A. Dumezich, Patricia Anne Rexford, Andrew R. Roberson, Thomas Lee Kittle-Kamp, Nathaniel Carden, and Monica Susana Melgarejo, for petitioner.

Alan Summers, Cathy A. Goodson, William A. McCarthy, Usha Ravi, Robert H. Schorman, Jr., and Gretchen A. Kindel, for respondent.

SUPPLEMENTAL MEMORANDUM OPINION

COHEN, Judge.

The supplemental opinion resolves the issue left undecided by our opinion in Tribune Co. v. Commissioner, 125 T.C. 110 (2005) (the Bender opinion). Pursuant to agreement of the parties, the issue involving the so-called "Mosby transaction" is submitted fully stipulated and decided on the basis of the Bender opinion. The findings of fact set forth in the Bender opinion are incorporated herein by this reference as if fully set forth. Only those facts unique to the Mosby transaction are included in this supplemental opinion. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.

Background

In 1998, in a transaction separate from but similar to the Bender transaction, Times Mirror Co., Inc. (Times Mirror), exchanged all of the outstanding stock of Mosby, Inc. (Mosby), in the "Mosby transaction". Times Mirror used the "corporate joint venture" structure to effectuate both the Bender and Mosby transactions. However, in contrast to the Bender transaction, before Times Mirror transferred Mosby stock, Mosby distributed certain assets to Times Mirror.

Times Mirror treated the exchanges of the Bender and Mosby stock as tax-free reorganizations within the meaning of section 368(a). Respondent determined in the statutory notice of deficiency that both the Bender and Mosby transactions were taxable. Petitioner asserts that the Bender and Mosby transactions qualify for tax-free treatment as reverse triangular mergers under section 368(a)(2)(E) or, alternatively, as "B" reorganizations under section 368(a)(1)(B). Substantially the same reasons support petitioner's position that the Bender and Mosby exchanges qualify as tax-free reorganizations.

Respondent's reasons for disallowing tax-free treatment of the Bender transaction are nearly identical to respondent's reasons for disallowing tax-free treatment of the Mosby transaction. As to the Mosby exchange only, respondent asserts an additional reason to disqualify that transaction as a reverse triangular merger. Respondent contends that Mosby's transfers of assets to Times Mirror prior to Times Mirror's transfers of Mosby stock present an alternative and independent ground for finding that the Mosby transaction did not meet the "substantially all" requirement of section 368(a)(2)(E).

In December 2004,...