Securities and Exchange Commission
Washington, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 25, 1995
AMREP CORPORATION
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(Exact name of registrant as specified in charter)
Oklahoma 1-4702 59-0936128
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
641 Lexington Avenue, Sixth Floor, New York, NY 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 705-4700
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Item 5. Other Events
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Management's Discussion and Analysis for the Fiscal Year ended
April 30, 1995 ("MDA") describes a dispute with the Internal Revenue
Service ("IRS"). The dispute concerns the method by which the Company
utilizes a provision of the Internal Revenue Code (the "Code") to adjust
taxable income of its Kable News Company subsidiary in an amount related
to magazines returned within a specified period following the close of the
tax year. It is reported in the MDA that the Company had been informed
that the IRS had issued notices of deficiency to two other taxpayers in
which the IRS contests those taxpayers' adjustments to taxable income
which were made in reliance on the same Code provision and use the same
method as that used by the Company, and that those taxpayers had commenced
litigation against the IRS in the Tax Court.
On September 25, 1995, the Tax Court ruled in favor of the IRS
in one of those cases. The Company and its professional advisors
believed, and continue to believe, that the Company's methods are correct
under the Code even though the IRS has issued regulations which require a
contrary method. However, the ruling of the Tax Court upholds the
regulations. The Tax Court ruling can be appealed to the United States
Court of Appeals, and the Company assumes it will be.
The Company intends to vigorously litigate the issue, assuming
as it does that the IRS will pursue the matter against it. The Company's
counsel is of the view that, if the Tax Court ruling in the other
corporation's case is reversed on appeal, the Company most probably will
prevail, but that if the Tax Court ruling is sustained the chances of the
Company ultimately prevailing are not large. If the Company does not
prevail, it will be faced with a current obligation to pay taxes, which
have already been recorded in the Company's financial statements as a
deferred tax liability, of approximately $20,000,000 and also interest
thereon, for which no reserve has been recorded, of approximately
$17,000,000.
The Company is advised that it will be a number of months at the
earliest before a Tax Court decision on the claim of the IRS against it
could be rendered. Our auditors have advised us that if the status of the
dispute with the IRS remains unchanged from the current status at the time
they next report on the Company's financial statements, they will have to
consider report modifications.
The Company is exploring various potential sources of funds
should the IRS prevail.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned hereunto duly authorized.
AMREP Corporation
Date: September 29, 1995 By: /s/ Valerie Ascuitto
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Vice President
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