Tax Court Sides With Newhouse Estate in Dispute
A Tax Court decision published Thursday overturned a $609.5-million IRS ruling against the estate of publisher Samuel I. Newhouse. The Internal Revenue Service said it has not decided whether to appeal.
The tax court sided with the estate on the only issue in one of the biggest tax disputes in the nation’s history: the value of Newhouse’s stock in the family’s publishing and broadcasting operations at the time of his death in 1979.
The IRS had contended that Newhouse’s holdings in Advance Publications Inc. and Newhouse Broadcasting Co. were worth a combined $1.32 billion. The estate, whose executors are his sons, Samuel I. Newhouse Jr. and Donald E. Newhouse, insisted that the value was $247.1 million.
After weighing weeks of testimony from both sides, Judge John Williams Jr. discounted the value of the stock to $235.6 million. “The experts, whose opinions were well-reasoned, disagreed about almost every issue, and we find that a willing buyer would have been uncertain about the rights and privileges of . . . (Advance) common stock,” he wrote.
That uncertainty, coupled with restrictions in Advance’s corporate charter that barred an outsider from controlling the company, would depress the stock price, the court reasoned.
IRS spokesman Steve Pyrek said agency lawyers are reviewing Williams’ 100-page opinion before deciding whether to appeal.