BANKRUPTCIES: The Taxman Rings Twice

The Taxman Rings Twice

After settling an epic four-year legal battle last month by agreeing to pay Pennzoil $3 billion, Texaco seemed ready to emerge from bankruptcy proceedings, and the company's executives thought they had every reason to celebrate. But the men who wear the star may have to put away the champagne and bring back the lawyers. Last week the Internal Revenue Service told Texaco that it may face a stunning back-tax bill: $6.5 billion.

According to Texaco lawyers, the IRS claim relates largely to the company's oil dealings between 1979 and 1981. As a member of a consortium known as the Arabian American...

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