Altria Group Inc. (MO:US) said it agreed to a $500 million settlement over lease transactions challenged by the U.S. Internal Revenue Service.
The dispute covered transactions between 1996 and 2003 in which the company would buy ownership stakes in public utilities, lease the assets back to the previous owners and take tax deductions. Altria, based in Richmond, Virginia, owns cigarette manufacturer Philip Morris USA Inc.
The company took a $627 million charge last year in anticipation of the resolution of the tax dispute. Altria will record a one-time earnings benefit of $68 million because of the difference between what it expected to pay and the final terms of the settlement, the company said.
The company, one of the last to defend the validity of leasing transactions that the government curtailed in 2004 and 2005, said the $500 million was composed of taxes and interest, not penalties.
IRS spokeswoman Christina D’Amico declined to comment on the settlement, saying federal law prohibits the agency from discussing individual taxpayers.
The case is Altria Group Inc. v. United States, 10-02404.
To contact the reporter on this story: Richard Rubin in Washington at email@example.com
To contact the editor responsible for this story: Jodi Schneider at firstname.lastname@example.org