US food group General Mills said on Friday it will pay the IRS US$425m in a settlement over corporate tax adjustments.

The company said the adjustments relate to the amount of capital loss, depreciation and amortization it reported as a result of the sale of non controlling interests in one of its subsidiaries between fiscal 2002 and 2008.

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General Mills said it expects to record a net reduction of income tax expensed of approximately $90m in the second quarter of fiscal 2011 due to the IRS settlement and an adverse ruling in California over state income tax liability.

The company added the payments have already been included in its annual cash plans and will not impact its targeted capital expenditures, dividend payments or share repurchases for 2011.

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