There Are Many Ways To Barter...Here’s Another Example

Last week we reported on how billionaire John Malone’s Liberty Media was pursuing bartering its stake in Sprint for 6,500 cellphone towers. The exchange, as opposed to a sale, would enable both Liberty Media and Sprint to avoid a heavy tax bill.

Now Malone is looking at another deal, this time with Rupert Murdoch’s News Corp. It’s a sophisticated but increasingly popular “exchange” method known as a “cash-rich split-off.” It would involve News Corp.’s putting cash and a business into a company that could be traded for News Corp. shares held by Liberty. The technique once again allows Liberty to avoid paying taxes on the increase in the value of its News Corp. shares.
Interestingly, cash could account for as much as 90% of the value of the company being bartered. But the key to a cash-rich split-off is that the business to be bartered needs to have been operated (by News Corp.) for at least five years.

Reprinted by permission of BarterNews Magazine (www.barternews.com)