Back in 1972, a man by the name of Sumner Redstone gave his son and daughter stock in National Amusements, Inc., a family business. The IRS is just now saying that Redstone failed to file a gift tax return on that transaction. People in California that make similar gifts may be interested to know that the IRS is just now coming after him for the 41-year-old tax debt.
At the time the gift was made, the family had been involved in a lawsuit, and the stock was given to the children as part of the settlement of that suit. The IRS says that Redstone owes them upwards of $1.1 million in taxes, penalties and interest on the gift. Redstone has filed a petition with the U.S. Tax Court in protest. In that petition, he claims that since the stock was given in settlement of litigation, it was given in an “ordinary business transaction” and not as a gift.
California residents may recognize Redstone as being a media mogul whose worth is estimated to be approximately $4.9 billion. However, Redstone wasn’t the billionaire media mogul then that he is now. Ironically, Redstone began his career working for the U.S. Department of Justice working on tax disputes. He now argues that the IRS has had plenty of opportunity over the course of the past four decades to claim Redstone needed to file the return and pay the taxes associated with it.
It is unprecedented for the IRS to come back after such a long period of time and make this type of claim regarding tax debt. As it turns out, a statute of limitations does not exist when there was never a return filed. It is speculated that recent litigation among the family may have peaked the IRS’s attention, though it remains to be seen how the dispute will ultimately be resolved.
Source: Bloomberg, “Billionaire Redstone Challenges IRS on Tax for 1972 Gift,” May 1, 2013