EFiled: Mar 11 2021 04:44PUCEST")
`Transaction ID 66412433 aemed
`Case No. 2020-0413-JTL Ee?i
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`* OF i aei
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`EXHIBIT 25
`EXHIBIT 25
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`EFiled: Mar 11 2021 04:44PM EST
`Transaction ID 66412433
`Case No. 2020-0413-JTL
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`

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`Case 1:20-cv-00813-LPS Document 35 Filed 08/18/20 Page 1 of 12 PagelD #: 1030
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`IN RE:
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`ALTABA,INC.,
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`Petitioner.
`
`Case No. 1:20-cv-00813-LPS
`
`
`
`
`
`Sweee”Nemwer”“seroSone”
`
`JOINT MOTION REGARDING CLAIMS RAISED BY
`CLAIMANT THE INTERNAL REVENUE SERVICE
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`Petitioner Altaba, Inc. (‘Altaba”) and the United States of America (“United States”)
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`hereby jointly move for the entry of the order, in the form attached hereto, determining that the
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`amount and form of security to be retained by Altaba as provided herein will be sufficient to
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`provide compensationforall of the claims of the Internal Revenue Service (the “Service”)
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`against Altaba.
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`In support of their motion, Altaba and the United States state as follows:
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`1.
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`Sections 280 and 281(a) of the General Corporation Law ofthe State of Delaware
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`(“DGCL”) sets forth a procedure whereby directors of aDelaware corporation may choose to
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`dissolve the corporation and distribute its assets pursuant to a process supervised by the
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`Delaware Court of Chancery. See 8 Del. C. §§ 275, 278, 280-282. On April 2, 2019, Altaba’s
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`Board of Directors unanimously approved and adopted a Plan of Complete Liquidation and
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`Dissolution and recommended approval of the Plan of Complete Liquidation and Dissolution to
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`Altaba’s stockholders. The Plan of Complete Liquidation and Dissolution was approved by
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`Altaba’s stockholders at a special meeting of stockholders held on June 27, 2019. Pursuant to
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`the Plan of Complete Liquidation and Dissolution, on October 4, 2019, Altaba filed a Certificate
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`of Dissolution with the Delaware Secretary of State, and on the same day wasdissolved in
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`accordance with Delaware law.
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`2.
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`On October 7, 2019, Altaba mailed notices (the “Notices”), pursuant to 8 Del. C.
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`§ 280, to all persons who Altaba believed might purport to have claims against it, requesting that
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`VERIZONO00001690
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`

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`Case 1:20-cv-00813-LPS Document 35 Filed 08/18/20 Page 2 of 12 PagelD #: 1031
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`the parties receiving such Notices present any claims against Altaba as directed therein and
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`advising such parties that any claims not presented by December 11, 2019 would be barred,
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`which Notices were also published in certain local and national newspapers.
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`3.
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`On December6, 2019, in response to the Notices, the Service presented claims to
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`Altaba in the total amount of $12,736,879,763, in respect of federal incometax liabilities for the
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`taxable years 2013, 2014, and 2016 through 2029 and Federal Insurance Contributions Act tax,
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`federal income tax withholding and Federal Unemployment Tax Act tax (collectively,
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`“employment taxes”) for all quarterly and annual taxable periods of 2013 through 2017 and 2019
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`through 2029 (collectively, the “Claims”).
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`4.
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`On February 24, 2020, Altaba mailed to the Service, pursuant to 8 Del C. §
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`280(a)(3), a notice that it had accepted-in-part and rejected-in-part the Claims (the “Partial
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`Rejection’).
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`5,
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`On March 20, 2020, the Service presented Altaba with revised claims in the total
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`amount of $2,879,738,162, in respect of federal incometax liabilities for the taxable years 2016
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`through 2029 and employmenttaxes for all quarterly and annual taxable periods of 2013 through
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`2017 and 2019 through 2029 (the “Revised Claims”).
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`6.
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`On May 15, 2020, the Service presented Altaba with further revised claims in the
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`total amount of $1,501,161,359, in respect of federal income tax liabilities for the taxable years
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`2016 through 2029 and employmenttaxes for all quarterly and annual taxable periods of 2014
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`through 2017 and 2019 through 2029 (the “Second Revised Claims”).
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`7.
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`The Second Revised Claims are, in their entirety, made up of unassessed tax
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`liabilities.
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`VERIZONO00001691
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`

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`Case 1:20-cv-00813-LPS Document 35 Filed 08/18/20 Page 3 of 12 PagelD #: 1032
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`8,
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`On May 28, 2020, Altaba filed in the Court of Chancery of the State of Delaware
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`a Verified Petition for Determinations Pursuant to 8 Del. C. § 280 (the “Petition’”), thereby
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`initiating an action captioned /n re Altaba, Inc., C.A. No. 2020-0413-JTL (Del. Ch.) (the
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`“Chancery Action’). The Petition seeks, among other things, a judicial determination in
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`accordance with the requirements of Section 280 of the DCGL of the amount and form of
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`security that will be reasonably likely to be sufficient to provide compensation for claims
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`asserted against Altaba by various claimants. Among other claims, in the Petition Altaba asked
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`the Delaware Court of Chancery to determine the amount and form of security that will be
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`reasonably likely to be sufficient to provide compensation for all of the claims asserted against
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`Altaba by the Service (the “Service Holdback Claim”).
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`9.
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`On June 16, 2020, the United States filed a Notice of Removal (the “United States
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`Notice,” Dkt. 1) removing the Chancery Action to this Court pursuant to 28 U.S.C. §§ 1441,
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`1442(a) and 1446(a). In its Notice, the United States “request[ed] that all claims other than the
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`Service’s claims in this matter be severed from the current action and remanded backto the
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`Delaware Court of Chancery pursuant to 28 U.S.C. § 1441(c)(2).” (United States Notice { 46)
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`10.
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`On June 16, 2020, the United States filed a complaint to reduce tax liabilities to
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`judgment against Altaba, seeking to reduce to judgment the portion ofthe tax liabilities in the
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`Service’s Second Revised Claims for which the taxable year has closed and for which Altaba has
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`filed tax returns, which complaint is docketed in this Court at docket number 20-cv-00811-LPS
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`(the “Collection Action”).
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`11.
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`On June 18, 2020, the United States filed a Notice of Removal(the “Chancery
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`Notice”) in theDelaware Court of Chancery.
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`In the Chancery Notice, the United States “note[d]
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`that it does not intend to remove any claims other than the IRS’s claims referenced in paragraphs
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`VERIZONO00001692
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`Case 1:20-cv-00813-LPS Document 35 Filed 08/18/20 Page 4 of 12 PagelD #: 1033
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`51 through 55 of the Verified Petition for Determinations Pursuant to 8 Del. C. § 280.”
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`(Chancery Notice at 1 n.1)
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`12.
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`On June 24, 2020, the United States filed an answer and counterclaim in response
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`to the Petition (Dkt. 5).
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`13.
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`On June 29, 2020, Altaba and the United States filed a Joint Motion to Sever and
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`Remand Certain Claims to the Delaware Court of Chancery (“Joint Motion to Sever,” Dkt. 6).
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`14.
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`On July 13, 2020, Oath Holdings Inc. and Verizon Communications Inc. filed a
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`Response to the Joint Motion to Sever (Dkt. 20).
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`15,
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`On July 13, 2020, Droplets Inc. filed a Joinder to the Joint Motion to Sever (Dkt.
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`21).
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`16.
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`17.
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`No other parties filed a response or opposition to the Joint Motion to Sever.
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`On July 20, 2020, each of Altaba and the United States filed a Reply to the
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`Responseto the Joint Motion to Sever (Dkt. 24, 25).
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`18.
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`On July 21, 2020, the United Statesfiled a first amended complaint against Altaba
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`in the Collection Action.
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`19.
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`On August 10, 2020, the Court granted the Joint Motion to Sever and Remand in
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`part, ordering that all claims raised in the Petition other than the Service’s claim and Verizon
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`Communication, Inc. and Oath Holding, Inc.’s (together “Verizon’”) contested tax-related claims,
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`were remanded to the Delaware Court of Chancery (Dkt. 28).
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`20.
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`On August 11, 2020, the Service presented Altaba with further revised claims in
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`the total amount of $1,767,376, 190, in respect of federal incometaxliabilities for the taxable
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`years 2016 through 2029 and employmenttaxes forall quarterly and annual taxable periods of
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`2014 through 2017 and 2019 through 2029 (the “Third Revised Claims’).
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`VERIZONO00001693
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`Case 1:20-cv-00813-LPS Document 35 Filed 08/18/20 Page 5 of 12 PagelD #: 1034
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`21.
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`Upon dismissal of the Collection Action, Altaba’s federal income tax returns for
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`tax years 2014, 2016, 2017, 2018 and 2019 are currently under examination by the Service,
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`currently under audit by the Service or currently otherwise subject to the Service’s administrative
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`procedures.
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`22.
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`Altaba and the Service agree that a “proceeding” within the meaning of 8 Del. C.
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`§ 280(a)(4) was timely commenced by the Service, such that the Third Revised Claims are not
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`and will not be barred by operation of the 120-day time limit in 8 Del. C. § 280(a)(4). Altaba
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`shall not plead, assert, or argue that the 120-day period set forth in DGCL § 280(a)(4) has
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`expired in connection with future claims by the Service associated with tax year 2020 or any
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`subsequent tax year.
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`23.
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`Altaba and the Service agree that Altaba has notfiled federal income tax returns
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`for the 2020 tax year as such tax returns are not yet due, nor has Altaba filed federal income tax
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`returns for any subsequent tax years.
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`24.
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`Altaba will retain an aggregate amount equal to $1,767,376, 190 (the “Agreed
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`Security Amount”) as security for the tax claims asserted by the Service in the Third Revised
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`Claims, subject to the terms and conditions provided herein;
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`25.
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`Altaba will retain the Agreed Security Amount in a separate account established
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`in Altaba’s name at U.S. Bank, with the understanding that the Agreed Security Amount will be
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`held in such account for purposes ofsatisfying the claims of the Service as described herein (the
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`“Security Arrangement”);
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`26.
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` Altaba and the United States agree that the Agreed Security Amount will be
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`reduced, and Altaba will be free to withdraw from the Security Arrangement the amount of any
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`such reductions, upon the following terms and conditions:
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`VERIZONO00001694
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`Case 1:20-cv-00813-LPS Document 35 Filed 08/18/20 Page 6 of 12 PagelD #: 1035
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`(a)
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`(b)
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`If any of the circumstancesidentified in paragraphs (b) or (h) below occurs,
`Altaba will provide written notice to the Service that Altaba plans to make a
`reduction in the Agreed Security Amount in respect of such event (a “Reduction
`Notice”);
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`Subject to paragraphs (c) though (g) below, reductions to the Agreed Security
`Amount shall be made upon occurrence of any of the circumstances describedin,
`and in the amounts specified in, each of subparagraphs (1) through (viii) below:
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`By agreements entered into in writing between Altaba and the
`Service on IRS Forms 870, 870-AD, 906, 866 or 4549 with respect
`to items included in the Service’s Third Revised Claims to the
`extent that the amount(s) agreed to be owed for such items are less
`than the amount(s) for such items included in the Service’s Third
`Revised Claims;
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`By the issuance by the Service to Altaba of a revenue agent’s
`report on IRS Letter 950 and accompanying schedules asserting an
`adjustment with respect to an item included in the Service’s Third
`Revised Claims to the extent that such adjustment is less than the
`amount for such item included in the Third Revised Claims (or not
`asserting any adjustment with respect to an item included in the
`Service’s Third Revised Claims), provided that a reduction under
`this subparagraph shall only be in respect of the decrease in the
`claimed amountreflected in such Letter 950 and accompanying
`schedules (and after taking into account any adjustments pursuant
`to subparagraph (i) above);
`
`Bythe issuance by the Service to Altaba of a statutory notice of
`deficiency pursuant to 26 U.S.C. § 6212(a) asserting an adjustment
`with respect to an item included in the Service’s Third Revised
`Claims to the extent that such adjustmentis less than the amount
`for such item included in the Third Revised Claims (or not
`asserting any adjustment with respect to an item included in the
`Service’s Third Revised Claims), provided that a reduction under
`this subparagraph shall only be in respect of the decrease in the
`claimed amountreflected in such statutory notice of deficiency
`(and after taking into account any adjustments pursuant to
`subparagraphs(i) and (ii) above);
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`By a Tax Court determination with respect to an item included in
`the Service’s Third Revised Claims to the extent that the amount
`determined by the Tax Court to be owed by Altaba is less than the
`amount for such item included in the Service’s Third Revised
`Claims (and after taking into account any adjustments pursuant to
`subparagraphs(i) through (iii) above);
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`(i)
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`(iit)
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`(iv)
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`VERIZONO00001695
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`Case 1:20-cv-00813-LPS Document 35 Filed 08/18/20 Page 7 of 12 PagelD #: 1036
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`(v)
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`(vi)
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`(vii)
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`(viii)
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`By payments made by Altaba to the United States Treasury with
`respect to items included in the Service’s Third Revised Claims
`(even if Altaba intends to file a claim for refund with respect to
`amounts paid);
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`By reductions to the forward-looking federal income tax claims
`included in the Service’s Third Revised Claims for tax years 2021
`through 2029, which shall be made based upon projections of
`Altaba’s future income to be made as of January 1 of each year
`(commencing as of January 1, 2021) based on the cash, securities
`and other assets held by Altaba as of such date and assumingthat
`Altaba will earn income on such cash, securities and other assets
`equal to the greater of (x) the one year U.S. Treasury rate as of the
`date of calculation, (y) Altaba’s effective annualized rate of return
`realized for the previous calendar quarter, or (z) two percent (2%)
`per annum. Future income tax reductions pursuantto this
`subparagraph can only be made one time per calendar year, no
`earlier than February 15 of each year (commencing as of February
`15, 2021), and must be the result of a reduction in Altaba’s
`projected future income
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`By reductions to the forward-looking employmenttax claims
`identified in the Service’s Third Revised Claims for tax years 2021
`through 2029, which shall be made based uponprojections of
`Altaba’s future employmenttax liabilities to be made as of January
`1 of each year (commencing as of January 1, 2021) (the
`“determination date”) based upon the average of the employment
`tax liabilities for the four calendar quarters immediately preceding
`such determination date. Future employment tax reductions
`pursuant to this subparagraph can only be made one time per
`calendar year, no earlier than February 15 of each year
`(commencing as of February 15, 2021); and
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`By expiration of the statute oflimitations on assessment for any
`tax periods covered by the Third Revised Claims, in which case
`the Agreed Security Amount shall be reduced by an amount equal
`to the federal income tax claims included in the Service’s Third
`Revised Claims with respect to such tax period (after taking into
`account any adjustments pursuant to subparagraphs(1) through
`(vil) above);
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`(c)
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`If at any time after the entry of the [Proposed] Order by this Court, the Service
`issues to Altaba a draft or final notice of proposed adjustment on IRS Form 5701,
`a statutory notice of deficiency pursuant to 26 U.S.C. § 6212(a), or other written
`explanation with reasonable specificity and supporting documentation, asserting
`an adjustment or deficiency with respect to an item that was not identified in the
`Third Revised Claims, then any reduction otherwise permitted under paragraph
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`7
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`VERIZONO00001696
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`Case 1:20-cv-00813-LPS Document 35 Filed 08/18/20 Page 8 of 12 PagelD #: 1037
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`(b) shall be offset by the amount ofadditional tax contemplated by or reflected in
`such notice or written explanation; provided that any amounts held back as a
`result of this paragraph (c) shall be subject to reduction in the same manner as
`provided in paragraph (b) with respect to amounts identified in the Service’s
`Third Revised Claims;
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`(d)
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`Notwithstanding the foregoing, and except as provided in paragraph (e), the
`parties agree that during the first three years after the entry of the [Proposed]
`Order by this Court, the Agreed Security Amount shall not be reduced below the
`following thresholds:
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`(i)
`
`(ii)
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`(iii)
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`Until the first anniversary of the entry of the [Proposed] Order, any
`reductions pursuant to paragraph (b), after taking into account the
`limitation set forth in paragraph (c), shall not cause the Agreed
`Security Amount to be reduced below seventy-five percent (75%)
`of the original Agreed Security Amount;
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`Until the second anniversary of the entry of the [Proposed] Order,
`any reductions pursuant to paragraph (b), after taking into account
`the limitation set forth in paragraph (c), shall not cause the Agreed
`Security Amountto be reduced belowfifty percent (50%) of the
`original Agreed Security Amount; and
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`Until the third anniversary of the entry of the [Proposed] Order,
`any reductions pursuant to paragraph (b), after taking into account
`the limitation set forth in paragraph (c), shall not cause the security
`to be reduced below twenty-five percent (25%) of the original
`Agreed Security Amount.
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`For the avoidance of any doubt, reductions permitted by paragraph (b),
`after giving effect to the limitation set forth in paragraph (c), that are not
`permitted to be madeat the time the circumstance giving rise to such
`reduction occurs by virtue of this paragraph (d) shall be permitted to be
`made as soon as the limitation in this paragraph (d) no longerrestricts
`such reduction.
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`(e)
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`At any time, Altaba may notify the Service in writing that it intends to make a
`payment to the United States Treasury out of the Agreed Security Amountin
`respect of any item included in the Third Revised Claims or in any notice or
`written explanation described in paragraph (c) (a “Payment Notice”). Within
`thirty (30) days of delivery of such Payment Notice, the Service shall provide
`Altaba with written paymentinstructions, and Altaba may thereafter cause the
`amounts described in the Payment Notice to be paid directly to the United States
`Treasury from the Security Arrangement in accordance with the written payment
`instructions provided by the Service;
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`VERIZONO00001697
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`Case 1:20-cv-00813-LPS Document 35 Filed 08/18/20 Page 9 of 12 PagelD #: 1038
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`(f)
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`(g)
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`(h)
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`(i)
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`Noreduction to the Agreed Security Amount shall be made for a period of forty-
`five (45) days following the delivery of a Reduction Notice to allow the Service
`time to determine that any reduction has been properly calculated and that any
`payment has been received and properly applied. Ifthe Service determines in
`good faith that any proposed reduction by Altaba has not been properly
`calculated, or that any payment has not been received and properly applied, the
`Service shall deliver written notice of its objection (an “Objection Notice’) to
`Altaba before the expiration of the forty-five (45) day period following the
`delivery of the Reduction Notice, which Objection Notice shall specify in
`reasonable detail the nature of the Service’s objection and shall attach any
`supporting documentation reasonably necessary for Altaba to evaluate and
`address such objection. After receipt of any Objection Notice, Altaba shall be
`permitted to reduce the Agreed Security Amount by any portion of the reduction
`specified in the applicable Reduction Notice that has not been objected to by the
`Service in its Objection Notice;
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`With respect to any amounts in a Reduction Notice that are in dispute, as set forth
`in an Objection Notice delivered by the Service, the parties shall negotiate in good
`faith in an attempt to reach agreement on the correct reduction amount as
`promptly as practicable following receipt of the Objection Notice by Altaba, but
`in any event within forty-five (45) days thereafter.
`In the event that any disputed
`item set forth in an Objection Notice remains unresolvedafter the good faith
`negotiation period specified in the immediately preceding sentence, either party
`may seek relief from this Court to resolve such dispute. Distribution ofthe
`disputed amount by Altaba is prohibited until an order or decision by this Court
`resolving the dispute becomes final;
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`Upon the expiration of the statute of limitations on assessmentforall tax periods
`included in the Service’s Third Revised Claims through and including December
`31, 2020 (or, if earlier, upon the reduction ofall such amounts to zero as a result
`of adjustments pursuant to paragraph (b)), the Agreed Security Amountshall be
`reduced to such amount as Altaba and the Service may agree, notwithstanding the
`provisions of paragraph (d), but subject in all respects to paragraphs (f) and (g);
`and
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`For the avoidance of doubt, if at any time Altaba and the Service agree that the
`Agreed Security Amount may be reducedto zero, Altaba will have no further
`obligations to maintain the Security Arrangement.
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`27.
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`The United States agrees that the form and amount of the Agreed Security
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`Amount to be retained by Altaba in the Security Arrangement as described herein is sufficient to
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`provide compensation forall of the Service’s tax claims, as contemplated by 8 Del. C.
`
`§ 280(c)(1).
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`VERIZONO00001698
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`

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`Case 1:20-cv-00813-LPS Document 35 Filed 08/18/20 Page 10 of 12 PagelD #: 1039
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`28.
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`Neither the United States nor the Service will object to the proposed interim or
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`final distributions described by Altaba in the Petition, or to any other distributions that Altaba’s
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`board of directors may approve, subject to Altaba’s compliance with its agreement to retain the
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`Agreed Security Amount as provided herein.
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`29.
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`The agreement contained in this Joint Motion constitutes the entire agreement of
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`the parties for the resolution of this action with respect to the Service’s claims, and either party
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`has the right to bring to the Court’s attention the other party’s violation of the terms of the
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`Court’s order.
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`30.
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`Within three (3) days of entry by the Court of an order substantially in the form
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`attached hereto (or any revised order to which both Altaba and the United States reasonably
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`consent), the United States shall file a motion to voluntarily dismiss the Collection Action
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`without prejudice.
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`31.
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`Accordingly, Altaba and the United States jointly request that the Court enter an
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`order, in the form attached hereto, determining that the amount and form of security to be
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`retained by Altaba as provided herein will be sufficient to provide security for claims asserted by
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`the Service.
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`32,
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`Given that Altaba and the United States have agreed in this Joint Motion to the
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`amount and form of security to be retained by Altaba as provided herein, the parties therefore
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`request that the Court dismiss this action, insofar as the Service’s claims, provided that either
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`party may petition this Court to enforce the terms of the Proposed Order, but only as expressly
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`permitted in the provisions of paragraph 26(g) aboveor in the event of a breach by the other
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`party.
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`10
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`VERIZONO00001699
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`Case 1:20-cv-00813-LPS Document 35 Filed 08/18/20 Page 11 of 12 PagelD #: 1040
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`33.
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`The only issue in this action, insofar as the Service’s claim, is whether Altaba has
`
`set aside, pursuant to 8 De/. C. § 280(c), an amount and form of security that will be reasonably
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`likely to be sufficient to provide compensation for the Service’s claims against Altaba. Given
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`that Altaba and the United States have agreed in this Joint Motion that the form and amount of
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`the Agreed Security Amount to be retained by Altaba in the Security Arrangement as described
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`herein is sufficient to provide compensation for the Service’s claims, and requested that the
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`Court dismiss this action insofar as the Service’s claims, the parties’ Joint Motion to Sever and
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`Remand Certain Claims to the Delaware Court of Chancery (Dkt. 6) is therefore moot.
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`Accordingly, the parties respectfully request that the Court dismiss the Joint Motion to Sever and
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`Remand with respect to Verizon’s contested tax-related claims, and, upon entry by the Court of
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`an order substantially in the form attached hereto, remand Verizon’s claims to the Court of
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`Chancery for further proceedings. See 28 U.S.C. § 1441(c); see also Robinson vy. U.S. Cold
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`Storage, Inc., No. 01-cv-697, 2002 WL 187511, at *3 (D. Del. Feb. 5, 2002) (holding that where
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`a federal defendantis dismissed from an action that was removed under 28 U.S.C § 1442(a)(1),
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`the court should not exercise supplemental jurisdiction over the remaining state law claims
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`unless considerations ofjudicial economy, convenience, and fairness to the parties provide an
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`affirmative justification for doing so).
`
`il
`
`VERIZONO00001700
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`

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`Case 1:20-cv-00813-LPS Document 35
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`Filed 08/18/20 Page 12 of 12 PagelD #: 1041
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`Respectfully submitted,
`
`/s/ Dennis M. Donohue
`Dennis M. Donohue (OH Bar # 0026504)
`Chief Senior Litigation Counsel
`Catriona M. Coppler (D.C. Bar # 241446)
`Trial Attorney, Tax Division
`U.S. Department of Justice
`P.O. Box 227
`Washington, D.C. 20044
`Tel.:
`(202) 307-6492 (DMD)
`Tel.:
`(202) 514-5153 (CMC)
`Fax: (202) 514-6866
`Dennis. Donohue@usdoj.gov
`Catriona.M.Coppler@usdoj.gov
`
`/S/ Paul J. Lockwood
`Paul J. Lockwood (ID No. 3369)
`Arthur R. Bookout (ID No. 5409)
`Matthew P. Majarian (ID No. 5696)
`SKADDEN, ARPS, SLATE,
`MEAGHER & FLOM LLP
`920 N. King Street
`P.O. Box 636
`Wilmington, DE 19899-0636
`Tel.:
`(302) 651-3000
`Fax:
`(302) 651-3001
`Paul. Lockwood@skadden.com
`Arthur. Bookout@skadden.com
`Matthew.Majarian@skadden.com
`
`Attorneysfor the United States ofAmerica
`
`- and -
`
`Armando Gomez (pro hae vice)
`David W. Foster (pro hac vice)
`SKADDEN, ARPS, SLATE,
`MEAGHER & FLOM LLP
`1440 New York Avenue NW
`Washington, D.C. 20005
`Tel.: (202) 371-7000
`Fax: (202) 661-8284
`Armando.Gomez@skadden.com
`David.Foster@skadden.com
`
`Attorneysfor Petitioner Altaba, Ine.
`
`DATED: August 18, 2020
`
`VERIZONO00001701
`
`

`

`EXHIBIT 26
`EXHIBIT 26
`
`

`

`(cid:221)¿›» (cid:239)(cid:230)(cid:238)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)Ł(cid:239)(cid:237)(cid:243)¸(cid:210)(cid:223) (cid:220)–‰«‡»†‹ (cid:239) (cid:218)•·»… (cid:240)Œæ(cid:239)Œæ(cid:238)(cid:240) —¿„» (cid:239) –” (cid:239)(cid:236) —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:239)
`
`IN THE UNITED STATES DISTRICT COURT
` FOR THE DISTRICT OF DELAWARE
`
`)
`IN RE:
`)
`
`)
`ALTABA, INC.,
`)
`
`
`)
`
`Petitioner.
`_______________________________________)
`
`Case No.
`
`Formerly Case No. 2020-0413-JTL in the
`Delaware Court of Chancery
`
`NOTICE OF REMOVAL
`
`PLEASE TAKE NOTICE that the United States of America, pursuant to 28 U.S.C.
`
`§§ 1441, 1442(a), and 1446(a), hereby removes the case of In re Altaba, Inc., previously pending
`
`in the Delaware Court of Chancery assigned Docket Number 2020-0413-JTL, to the United
`
`States District Court for the District of Delaware. As grounds for the removal, the United States
`
`avers as follows:
`
`1.
`
`On October 4, 2019, Petitioner, Altaba, Inc.
`
`a Certificate of
`
`Dissolution with the Delaware Secretary of State and formally dissolved in accordance with
`
`Delaware law. Pet. ¶ 25; Pet. Ex. 1.
`
`2.
`
`Altaba has elected to wind up its affairs through a state-law dissolution process
`
`under the General Corporation Law of
`
`). DGCL § 280; Pet. ¶ 7.
`
`3.
`
`Pursuant to that process, Altaba sent notice of the dissolution to the Internal
`
`Altaba must be submitted by December 11, 2019. Pet. ¶¶ 27, 30.
`
`4.
`
`On December 6, 2019, the Service presented its dissolution claim to Altaba in the
`
`forming the Service that any claim against
`
`income tax liabilities for the taxable years 2013, 2014, and 2016 through 2029 in the total
`
`amount of $12,602,237,114, and a claim for Federal Insurance Contributions Act tax, federal
`
` The Dissolution Claim consists of
`
`1
`
`

`

`(cid:221)¿›» (cid:239)(cid:230)(cid:238)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)Ł(cid:239)(cid:237)(cid:243)¸(cid:210)(cid:223) (cid:220)–‰«‡»†‹ (cid:239) (cid:218)•·»… (cid:240)Œæ(cid:239)Œæ(cid:238)(cid:240) —¿„» (cid:238) –” (cid:239)(cid:236) —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:238)
`
`income tax withholding, and Federal Unemploym
`
`nd annual taxable periods of 2013 through 2017 and 2019 through 2029
`
`in the total amount of $134,642,642. Pet. ¶ 51.
`
`5.
`
`After the Service submitted its Dissolution Claim, Altaba made estimated tax
`
`payments in the amount of $5,759,000,000 for the taxable year 2019. See Pet. ¶ 51. These
`
`payments, made on December 16, 2019, reduced
`
`See id.
`
`6.
`
`On February 24, 2020, Altaba sent a letter to the Service accepting-in-part and
`
`¶ 52; Pet. Ex. 34. The Rejection
`
`Notice indicated that Altaba intends to hold back an aggregate amount of $659,177,452 as
`
`7.
`
`The Rejection Notice did not specify th
`
`Dissolution Claim that Altaba accepts or rejects, the basis for the partial rejection of the claim, or
`
`1
`
`8.
`
`On March 20, 2020, the Service submitted a revised claim in the total amount of
`
`$2,879,738,162, consisting of a claim for income taxes in the total amount of $2,787,941,723 for
`
`the taxable years 2016 through 2029 and a claim for employment taxes in the total amount of
`
`$91,796,439 for all quarterly and annual taxable periods of 2013 through 2017 and 2019 through
`
`9.
`
`On May 15, 2020, the Service presented a second revised claim in the total
`
` Pet. ¶ 53; Pet. Ex. 35. The Second
`
`Revised Claim consists of a claim for income taxes in the total amount of $1,405,098,829 for the
`
`1 Altaba notes that it aggregates
`
`e of its petition. Pet. ¶ 53 n.5.
`
`2
`
`

`

`(cid:221)¿›» (cid:239)(cid:230)(cid:238)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)Ł(cid:239)(cid:237)(cid:243)¸(cid:210)(cid:223) (cid:220)–‰«‡»†‹ (cid:239) (cid:218)•·»… (cid:240)Œæ(cid:239)Œæ(cid:238)(cid:240) —¿„» (cid:237) –” (cid:239)(cid:236) —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:237)
`
`taxable years 2016 through 2029 and a claim for employment taxes in the total amount of
`
`$96,062,531 for all quarterly and annual taxable periods of 2014 through 2017 and 2019 through
`
`2029. Pet. Ex. 35.
`
`10.
`
`11.
`
`The Second Revised Claim is, in its entirety, made up of unassessed tax liabilities.
`
`Altaba filed a petition for determinations pursuant to DGCL § 280 in the
`
`Delaware Court of Chancery on May 28, 2020. A copy of the petition is attached hereto as
`
`Exhibit A.
`
`12.
`
`In its petition, Altaba proposes a two-step process for the Court to determine the
`
`form and amount of the security that must be set aside to cover all known and future claims in its
`
`ond Revised Claim of
`
`May 15, 2020. Pet. ¶ 1.
`
`13.
`
`In the first step, Altaba requests an interim order approving a total holdback
`
`amount of approximately $7.3 billion, which is equal to the full amount of security requested by
`
`each claimant. Pet. ¶¶ 1, 8, 9. If Altaba receives such an interim order, it then proposes to
`
`lars in cash to stockholders without waiting for the final determination
`
`of the amount of security reasonably likely to be
`
`in dispute. Id.¶ 1.
`
`14.
`
`In the second step, Altaba proposes that
`
`to develop a factual record (if necessary) and present legal argu
`
`Chancery Court can make a final determination as to the proper holdback amount for each claim
`
`in dispute. Pet. ¶¶ 1, 12.
`
`15.
`
`Altaba has named the Service as one of its claimants in the petition, averring that
`
`the Service has asserted a claim against Altaba for tax liabilities of about $1.5 billion for the
`
`3
`
`

`

`(cid:221)¿›» (cid:239)(cid:230)(cid:238)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)Ł(cid:239)(cid:237)(cid:243)¸(cid:210)(cid:223) (cid:220)–‰«‡»†‹ (cid:239) (cid:218)•·»… (cid:240)Œæ(cid:239)Œæ(cid:238)(cid:240) —¿„» (cid:236) –” (cid:239)(cid:236) —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:236)
`
`taxable years 2013 through 2029. Pet. ¶¶ 51-55. Given that the Service is an agency of the
`
`United States, the United States is also an interested party in this proceeding.
`
`16.
`
`In its petition, Altaba states that it rejects the full amount of
`
`and proposes a holdback amount of $659,177,452, specifically requesting that the Chancery
`
`Court determine under DGCL § 280(b)(2) that $659,177,452 provides sufficient security for the
`
`claims asserted by the Service. Pet. ¶¶ 52, 53-54;
`
`holdback amount is not sufficient to satisfy
`
`I.
`
`The Delaware Court of Chancery Lacks Jurisdiction Over the United States.
`
`17. While the Delaware Chancery Court generally has jurisdiction to determine the
`
`sufficiency of the holdback amounts for such claims, specifically to determine the amount and
`
`form of security that will be reasonably likely to be sufficient to provide compensation for these
`
`claims, it does not appear to have jurisdiction to determine the merits of the claims of the
`
`Service, an agency of the United Stat
`
`See DGCL § 280(c)(1)
`
`(providing that a corporation that provides notice under § 280(a) must petition the Court of
`
`ecurity that will be reasonably likely to be
`
`sufficient to provide compensation for a
`
`18.
`
`A determination regarding the amount and form of security that will be
`
`reasonably likely to be sufficien
`
`for tax liabiliti