Tax liabilities of Bishop'sBy Rick Daysog
for-profit subsidiaries will
be negotiated later
The Bishop Estate will owe $9 million plus interest under a proposed closing agreement with the Internal Revenue Service.
Sources familiar with the proposed settlement said the $6 billion charitable trust also will retain its tax-exempt status pending the permanent removal of the estate's five former trustees, Richard "Dickie" Wong, Henry Peters, Oswald Stender, Lokelani Lindsey and Gerard Jervis.
The estate's tax liabilities, which cover the organization's 1992 through 1996 fiscal years, are well below the $65 million initially demanded by the IRS in January, sources said.
But they do not include the tax liabilities of the estate's large for-profit subsidiaries, which could total tens of million of dollars.
The estate and the IRS recently agreed to separate the issue of the subsidiaries' tax liabilities from negotiations over the trust's tax-exempt status and the nonprofit parent's tax bill.
Negotiations over the liabilities of the estate's for-profit subsidiaries -- whose holdings include mainland real estate interests, a majority stake in a Southern California bank and investments in China -- could take several months to settle, sources believe.
A spokesman for the estate could not be reached for immediate comment.
The agreement comes after an four-year IRS audit of the Bishop Estate and its subsidiaries. After issuing its preliminary findings, the IRS threatened to revoke the estate's tax-exempt status in April if the old board members were not removed permanently.
Probate Judge Kevin Chang temporarily removed Peters, Wong, Lindsey and Jervis and accepted the voluntary resignation of Stender on May 7 in response to the IRS threat. Chang also named an interim board of trustees and gave them 90 days to seek the permanent removal of the old board members.
Circuit Judge Bambi Weil permanently removed Lindsey on May 6 after a five-month trial. Jervis resigned on Friday.
Sources said the proposed settlement will be filed in probate court tomorrow along with a petition to permanently remove Wong and Peters.
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