WASHINGTON-The Senate Finance Committee last week relaxed a provision in the tax-cut bill that would allow AirTouch Communications Inc.’s proposed $5 billion purchase of U S West Inc.’s wireless properties to go forward.
The legislation, authored by panel Chairman William Roth (R-Del.), would permit nonabusive, or legitimate, tax-free corporate spinoffs. Roth wants to save $1.4 billion by ending so-called Morris Trust transactions, which prohibit certain tax-free stock sales of corporate subsidiaries.
“We hope it (the legislation) will come out in our favor,” said Amy Damianakes, a spokeswoman for AirTouch. “This is a deal that has been in the works for a while.”
A companion bill sponsored by Rep. Bill Archer (R-Texas) retains a wholesale ban on tax-free Morris Trust divestitures and, thus, could throw a wrench in the AirTouch-U S West deal.
The tax legislation has created a rift between the GOP leadership in Congress and the White House that’s described by some as “class warfare.” President Bill Clinton says Republican tax breaks benefit the wealthy at the expense of the poor.
