LABELLE, Fla., March 17, 2011 (GLOBE NEWSWIRE) -- Alico, Inc. (Nasdaq:ALCO), a land management company, announced that it has received a Revenue Agent's Report ("RAR") from the Internal Revenue Service ("IRS") dated March 9, 2011 pertaining to previously disclosed examinations of Alico, Inc., Agri-Insurance Company, Ltd. and Alico-Agri, Ltd. tax returns for the tax years ended August 31, 2005, 2006, 2007 and the one month transition period ended September 30, 2007 (the "Dispute Period"). The March 9, 2011 RAR requires Alico and its subsidiaries to either remit $13.0 million, consisting of $8.7 million in taxes and $4.3 million in penalties, or file a response within 30 days of the notice. Alico previously reported that on September 9, 2010 and October 28, 2010, the IRS issued RARs pursuant to its examinations of Alico, Agri-Insurance and Alico-Agri for the Dispute Period. Based on the combined positions taken in the September 9, 2010, October 28, 2010 and March 9, 2011 RARs, the IRS has demanded additional taxes and penalties of $26.8 million, consisting of $14.5 million in taxes and $12.3 million in penalties. The RARs did not quantify the interest on the taxes.
The September 9, 2010, October 28, 2010 and March 9, 2011 RARs principally challenge (i) the validity of an election made by Agri-Insurance to be treated as a disregarded entity for U.S. tax purposes; and (ii) Alico-Agri's ability to recognize income from real estate sales under the installment method of accounting by asserting that Alico-Agri was a dealer in real estate during the years under examination. The March 9, 2011 RAR pertains to withholding taxes that would be due by Alico-Agri if the IRS is successful in the assertion that Agri-Insurance and Alico-Agri are required to file separate tax returns during the Dispute Period. Alico does not agree with the positions taken by the IRS and filed its response to the September 9, 2010 and October 28, 2010 RARs on December 14, 2010. The Company intends to dispute the claims made in the March 9, 2011 RAR by filing a timely response that is consistent with prior positions taken.
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