Altria Settles With IRS Problems

Source from:  Tobacco World 06/29/2012

Altria Inc (NYSE: MO), a leading cigarette manufacturer in the world and owner of popular brands Marlboro, entered into an agreement to settle all disputes with the Internal Revenue Service (IRS). The company will pay about $ 500 million for federal and state income taxes, as well as the related estimated interest to settle the dispute with the IRS. Of the $ 500 million, Altria will pay $ 450 million by the end of the second quarter of 2012, relating to federal income tax and related interest assessed in connection with the 2000 and 2010 taxes. In June 2011 IRS concluded its consideration a consolidated federal income tax returns in Altria's 1996 and 2003. IRS has decided to deny tax benefits enjoyed by the closed cup (a division of Altria) in respect of certain loan lease transactions entered a closed crucible. IRS relied on these operations, as lease-in/lease-out ("LILO") and sale-in/lease-out ("silo") transactions. The codification of accounting standards, PMCC leveraged transactions have shown, lease transactions for financial reporting and, as a lease in accordance with the applicable case law and IRS administrative guidance for 1996 and 2009 tax years for income tax purposes. Altria, however, believes that the tax treatment of LILO and SILO closed cup transactions on federal and state income tax in accordance with applicable tax laws, and challenged the refusal in favor of a federal court. However, the ruling was in favor of the IRS. As of the fiscal year ended in December 2011, Altria, in the settlement of the federal income tax payments and interest with respect to the LILO and SILO transactions in 1996 to 2003 taxes totaling about $ 1.1 billion. Under the agreement, the company decided not to apply for benefits in future tax years. Altria has been registered on the amount of $ 627.0 million for fiscal year 2011 in anticipation of payment for transactions entered into in a closed crucible. However, due to lower than anticipated interest expense on tax underpayments, the company made a profit of 3 cents per share. Taking this into account the benefits, the company revised its revenue estimates range from $ 2.25 to $ 2.31 in the range of $ 2.28 to $ 2.34. The new cooperation of the windows A / S for the development of innovative, non-combustible nicotine-containing products for adult tobacco users indicated the company's ability to assume the mood of consumers. There was a general shift of consumers with low risk and smokeless tobacco products. The new company will allow the company's market share in this industry. Nevertheless, increased restrictions on smoking in the U.S. and Europe since 2010 have had a significant impact on cigarette consumption. In addition, FDA also proposed a ban on menthol, in accordance with the Law on Tobacco Control. In accordance with the act, menthol cigarettes have an adverse impact on public health and, consequently, the removal of menthol would be helpful. The proposed ban being considered. This type of ban would lead to serious black market for products that would be extremely detrimental to all parties. Thus, we prefer to stand aside. Currently we have a long-term Neutral recommendation for Altria, which carries a Zacks # 3 (Short-term retention). Enditem