When billionaire Billy Joe “Red” McCombs, co-founder of ClearChannel Communications Inc., reported a $9.8 million loss on histax return, he failed to include about $259 million from alucrative stock transaction.

After an audit, the Internal Revenue Service ordered him to pay$44.7 million in back taxes. McCombs, who is worth an estimated$1.4 billion and is a former owner of the Minnesota Vikings, DenverNuggets and San Antonio Spurs sports franchises, sued the IRS,settling the case in March for about half the disputed amount.

McCombs's fight with the IRS illustrates an overlooked facet inthe debate over tax rates paid by the nation's wealthiest.Billionaires — from McCombs to Philip Anschutz to Ronald S. Lauder— who derive the bulk of their wealth from stock appreciation areusing strategies that reap hundreds of millions of dollars fromthose valuable shares in ways the IRS often doesn't classify astaxable income, securities filings and tax court records show.