Altria Group Inc. announced that it will record about $1 billion in tax benefits in the first quarter of 2006 after the Internal Revenue Service finished reviewing its tax returns from 1996 through 1999.
The tax benefits, which result from the reversal of tax reserves, will have no impact on the cash position at Altria, formerly called Philip Morris. However, the company will reimburse $337 million in cash to Kraft Foods Inc., which is majority owned by Altria, in addition to pre-tax interest of $46 million.
Adjusted for the payment to Kraft, the reversal of tax reserves will boost Altria’s net earnings by roughly $960 million. Kraft also raised its earnings forecast.
Altria also stated that it will continue to contest about $170 million in tax and interest in connection with leveraged-lease transactions by its Philip Morris Capital Corp. aircraft-leasing unit. The company warned that in future audits, the IRS may challenge similar transactions by the leasing division.