Dow Jones reports that Microsoft co-founder Paul Allen, owner of the NFL's Seattle Seahawks and the NBA's Portland Trailblazers, will reap a billion dollar tax cut from the economic stimulus bill:
Here is the report from Dow Jones published by CNN Money.
"The provision is aimed at helping companies that are trying to restructure their debt, by delaying taxes that would otherwise be due when debt holders agree to forgive a portion of the debt. One such company is cable provider Charter Communications Inc. (CHTR), where Allen serves as chairman and holds a majority stake. Charter announced earlier this month it will file for Chapter 11 bankruptcy protection as part of a restructuring agreement with some of its debt holders to reduce its debt load by $8 billion. The new law temporarily suspends taxes on debt amounts that are forgiven in 2009 and 2010. ...
"Under the new law, companies will be able to delay paying taxes on income from debt that is forgiven until 2014, and then to spread the taxes on that income from 2014 to 2018. The law makes clear that partnerships like Charter Holdco, parent company of Charter Communications Inc., also are eligible to benefit from the provision.
"Under normal tax rules, forgiveness of partnership debt is counted as a "deemed distribution" to the partner. The law ensures that the income from this distribution doesn't have to be recognized until 2014.
"Since Allen's stake in Charter is around 50%, his partnership share of the debt forgiveness could be as much as $4 billion. Assuming an effective tax rate of 25%, the new law could spare Allen the necessity of paying as much as $1 billion in taxes ..."
The reference is taken from Paul Caron's Tax Prof blog.
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