Starwood Hotels & Resorts Worldwide Inc. has gone to U.S. Tax Court to fight a claim by the Internal Revenue Service that it owes $214.7 million in back taxes related to its 1998 acquisition of ITT Corp.
Starwood beat out competitor Hilton Hotels Corp. when it acquired ITT in a deal valued at $14.6 billion. ITT's hotel assets were coveted by both businesses. As part of the purchase, Starwood sold off a number of ITT assets. One of them was ITT World Directories, which a Dutch publisher bought for $2.1 billion.
ITT Corp. is unrelated to ITT Industries Inc. of Harrison, which it had spun off as a separate company in 1995.
The dispute between Starwood and the IRS is over that taxable status of the sale of World Directories, a telephone directory and yellow pages publisher serving six nations. Starwood recorded it as a tax-free reorganization; the IRS says Starwood realized a $1.4 billion capital gain on which taxes are due.
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