From the Wall Street Journal:
Classic Residence by Hyatt, a group of businesses that run upscale retirement communities, is battling the Internal Revenue Service over allegations it underpaid its taxes by more than $107 million, in a dispute over the tax treatment of entrance fees paid by incoming residents.
The issue boils down to whether the entrance fees qualify as taxable income, as the IRS asserts, or interest-free loans, as Classic Residence argues. Other retirement communities charge similar fees.
Classic Residence is chaired by 51-year-old Penny Pritzker, part of the Chicago-based Pritzker business dynasty, whose holdings range from Hyatt Hotels Corp. to TransUnion, the big credit-reporting company. She founded Classic Residence in 1987.
In 2008, Ms. Pritzker was national finance chairwoman of Barack Obama's presidential campaign, overseeing its fund-raising efforts, and now serves as a member of the president's Economic Recovery Advisory Board; a panel that helps set and evaluate the Obama administration's economic policy.
Ms. Pritzker was traveling Wednesday, and couldn't be reached for comment on the tax dispute.
Classic Residence communities are set up to provide their residents with increasing levels of care, including skilled nursing services, as they grow more infirm. Entrance fees can range from the low six figures to more than $2 million per person, depending on the size and amenities of the living unit involved.
