Never mind King Kong. Some of the Empire State Building's owners may face a tighter squeeze from Uncle Sam.
Investors who have a stake in the Manhattan skyscraper could face a towering tax bill if plans to turn the company into a publicly traded real estate investment trust go forward.
Malkin Holdings LLC, which runs the building, filed plans in February to consolidate three of its companies and raise up to $1 billion by selling stock in the new company, Empire State Realty Trust.
Under the plans for the stock offering, Malkin would be allowed to trade some of its interest for operating partnership units. Most other investors in the original companies would get stock and face a heavier tax burden.
That disparity, spelled out in a regulatory filing, could further stoke investor opposition to the IPO. Investors have filed at least three lawsuits in recent weeks taking issue with the structure of the offering.
"There're two standards _ the one that's good for them and tough on everybody else," said Richard Edelman, whose grandfather was among the first investors to buy a stake in the skyscraper owner more than 50 years ago.
Edelman, who works in San Diego, launched a website in February that is critical of the IPO and aims to help fellow investors wade through the clutter of regulatory filings.
Under terms of the IPO, Malkin Holdings and affiliates would generally receive operating partnership units instead of common stock. The stock that it does get, plus the operating partnership units, would be tax-deferred.
That's not the case for the most other investors, who are advised in the filings to consult with a tax adviser because, in some cases, an investor might not be able to receive sufficient cash to pay their tax liabilities.
Investors generally have to recognize a gain or a loss for federal tax purposes, depending on the value of shares of stock they receive.
A Malkin Holdings spokesman declined to comment.
Millions of tourists visiting New York ascend its heights to gape over the city from its observation deck, made famous in films such as "Sleepless in Seattle." It was 1933's "King Kong" that showed a giant ape clutching Fay Wray and fending off airplanes atop the tower.
Empire State Realty, which owns and operates 12 properties in Manhattan and greater New York, expects to trade on the New York Stock Exchange under the stock ticker symbol ESB.
By going public, Empire State Realty will be able to tap the equity markets for cash, something real estate investment trusts have had a lot of success doing, even in a wobbly economy.