IRS Ban May Affect Disney Securities Sale

WASHINGTON — Walt Disney Co. recently raised $1.3 billion in private securities sales that may have to be restructured or reversed to comply with new Internal Revenue Service regulations banning such transactions.

The Burbank-based theme park and media company disclosed in its most recent quarterly filing with the Securities and Exchange Commission that it raised the money by selling “equity interests” in two real estate investment trusts. The sales to third-party investors took place in the company’s first two fiscal quarters, from October through March.

Disney didn’t specify what kind of equity interests it sold. However, a person familiar with the sales confirmed they were so-called fast-pay preferred stock, or step-down preferred, which the IRS recently banned.

Although the transactions were legal when they occurred, the IRS said in February that it considered them an abuse of the tax system and announced it was developing regulations to stop the practice. By the end of the year, the agency said, it will issue proposed regulations spelling out how the transactions should be restructured.

Disney said in February that it had sold such securities, as have other companies, including Time Warner Inc. Disney spokesman Ken Green declined to comment on the transactions listed in the SEC filing, saying they are private and were properly disclosed.

Disney shares closed at $82.125, unchanged on the New York Stock Exchange.