The Internal Revenue Service is now convinced that Janus sale of its DST Systems, Inc. was indeed a non-taxable event to Janus shareholders. The tax authorities had questioned the December, 2004 divestment as part of their regular review of Janus' 2003 Federal income tax return.

Janus swapped 32.3 million common shares of DST in exchange for 100 percent of Capital Group Partners, Inc. (the printing and fulfillment subsidiary of Janus doing business as Rapid Solutions Group). It claimed that the transaction was a tax-free share exchange under Section 355 of the tax code.

The IRS told Janus yesterday that it agrees with that interpretaion and that it is accepting the mutual fund companies tax return as first filed.

That means that Janus will not have to pay capital gains taxes on the $1.2 billion swap.  

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