Turner Broadcasting System, Inc. and Subsidiaries - Page 1

                                   111 T.C. No. 18                                    

                               UNITED STATES TAX COURT                                

          TURNER BROADCASTING SYSTEM, INC. AND SUBSIDIARIES, Petitioner v.            
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

                         TRACINDA CORPORATION, Petitioner v.                          
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket Nos. 13977-96, 14786-96.    Filed December 23, 1998.            

                    Ps (TBS and Tracinda) and others engaged in a                     
               series of complex commercial transactions that closed                  
               simultaneously.  TBS acquired a publicly held and                      
               traded company (MGM) by way of a reverse triangular                    
               subsidiary merger.  At the same time as the acquisition                
               by merger, MGM transferred all the shares in its wholly                
               owned subsidiary (UA) to one of its former                             
               shareholders, Tracinda.  Tracinda then sold some of the                
               UA shares to former shareholders of MGM pursuant to a                  
               prospectus and subscription agreement, which was                       
               contemplated in the initial agreement.  The                            
               consideration received by MGM for the UA shares was                    
               less than MGM's basis in those shares (UA Loss).  Both                 
               Ps claim a tax consequence from the sale of the UA                     
               shares.  TBS claims the loss was recognized by MGM and                 
               is available to the TBS Group.  Immediately prior to                   

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