UPDATE 1-IRS claim against Tyco may force former units to contribute to tax bill
July 2 (Reuters) - Security services provider ADT Corp said it may have to contribute to a tax bill faced by former parent Tyco International Ltd if the total amount assessed by the IRS exceeded $1.85 billion.
Tyco said on Monday it had received a notice from the U.S. Internal Revenue Service stating that several of the company's former units, including ADT, owed taxes of $883.3 million and penalties of $154.0 million for tax years from 1997 to 2000. ()
Tyco said four former subsidiaries would contribute to paying the liabilities under tax-sharing agreements. The companies are Covidien Plc, TE Connectivity Ltd, ADT and Pentair Ltd. ()
Tyco also said the IRS had disallowed interest and related deductions returns totaling about $2.86 billion related to intercompany debt transactions.
J.P.Morgan analyst Stephen Tusa said he did not expect Tyco to have created incremental reserves on account of the IRS notice.
Tusa noted that Tyco had already settled similar cases regarding pre-1997 and 2001-2004 intercompany debt for about 20 percent of the IRS claims.
"There does not appear to be anything substantially different about these cases," the analyst said.
Tyco said on Monday it disagreed with the IRS position and intended to file petitions to the U.S. Tax Court contesting the adjustments.
No payments with respect to these matters would be required until the dispute is definitively resolved, which, based on the experience of other companies, could take several years, Tyco said in the filing.
Covidien said it "strongly" disagrees with the IRS' proposed adjustments. Pentair was not immediately available for comment.
Shares of ADT, which was spun off from Tyco in September, were down 2 percent at $39.62 in afternoon trading on the New York Stock Exchange.
- Air strike kills 15 civilians in Yemen by mistake: officials
- North Korea executes leader's powerful uncle in rare public purge |
- Insight: In Yemen, al Qaeda gains sympathy amid U.S. drone strikes
- Twitter backtracks on block feature after users revolt
- Iran angry over U.S. sanctions, nuclear talks interrupted