John Malone, the famously tax-averse chief of Liberty Media, said Tuesday the company will pay $136 million to settle a dispute with the Internal Revenue Service over its 2010 taxes. It will take the hit in the current fourth quarter.
Liberty and former parent Liberty Interactive said the deal resolves all outstanding disputed federal income tax positions with the IRS through 2010.
Malone, who openly abhors the tax code, has spent lots of energy trying to skirt it over the years. He transformed Liberty from an investment vehicle that only holds stakes in other companies into an operating company — in large part to reduce the company’s tax bill.
This particular disagreement involved taxes related to stock derivative positions taken by Liberty Interactive. Liberty said it will settle all outstanding share borrowing arrangements by year’s end by releasing the pledged shares used in the derivative deals to a counter party it didn’t name. The settlement won’t result in any further taxable gain or loss.
Liberty also expects its next quarterly financial statement to reflect a $240 million deferred income tax benefit.
Liberty’s assets, spread throughout a maze of companies, include Starz, Sirius XM, Live Nation and Barnes & Noble and minority stakes in Time Warner and Viacom.