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The Internal Revenue Service ruled Thursday that the split-off of Hughes Electronics from General Motors, a decision needed for Hughes' proposed $26 billion merger with EchoStar, would be tax-free for federal income-tax purposes.

The IRS move was the first of three crucial OKs the merging companies need from regulators in Washington, D.C. GM, Hughes - parent of DirecTV - and EchoStar are seeking regulatory clearances and approvals from the Department of Justice and the Federal Communications Commission for their proposed transaction.

In a statement, EchoStar said it's pleased with the IRS ruling. "EchoStar and Hughes continue to be fully engaged with the DOJ and the FCC in their merger review process. We remain confident that we will receive approvals from the FCC and DOJ and close the transaction by end of the year," the company said.

This week, Hughes and DirecTV sent FCC staff data on subscribers - and whether they live in rural areas served by the National Rural Telecommunications Cooperative or by the satellite TV provider itself. The data also contained information on payments to retailers. In addition, EchoStar sent FCC staff subscriber data on a zip code basis.

Specifics of the data were not available, kept confidential by the agencies and companies in an effort to keep sensitive business/competitive information from going public. The data provided was generally listed in separate filings Hughes and EchoStar made at the commission.

Hughes and GM said they are in the process of preparing materials to be distributed to GM and GMH stockholders seeking approval for the transaction, and to EchoStar stockholders for their information.

From SkyReport (Used with Permission)
 
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