Clear Channel and CBS Radio were both far too large to accomplish the reverse Morris Trust structure,
Question:
Clear Channel and CBS Radio were both far too large to accomplish the reverse Morris Trust structure, but they could have bid for the ABC Radio assets with cash. Suppose that Disney had sold the stock of ABC to Clear Channel or CBS Radio in a deal for cash only (no stock consideration), and that all parties agreed to make a 338(h)(10) election. How much would Clear Channel or CBS Radio have had to offer for ABC Radio in order for Disney to receive the same amount of compensation after taxes as Disney and its shareholders received under the tax-free transaction with Citadel? Assume Disney faced a 35 percent marginal tax rate and that Disney shareholders did not have to pay any taxes on cash received. Do you think either Clear Channel or CBS Radio would have been willing to make such an offer?
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill