Shares in Crown Resorts Limited (ASX: CWN) traded higher today despite the company announcing it has been hit with a $250 million income tax demand from the Australian Taxation Office. In addition the tax office has imposed penalties of $112 million on Crown taking the total bill to $362 million at a time when Crown’s balance sheet is already under pressure funding several large development projects.

The amended assessments are in respect of income tax paid for the financial years ending 30 June 2009 and 2014. The casino operator said the amended assessments relate to the tax treatment of some of the financing for Crown’s investment in Cannery Casino Resort and other investments in North America.

Crown posted earnings of $562 million in the last financial year so an unexpected tax bill of $250 million is not small change, although the group is determined to fight the liabilities and said it will see the ATO in court if necessary.

Crown’s majority owner James Packer has recently stepped down as chairman and director of the company, as he pursues a relationship with pop singer Mariah Carey and spends more time in Israel where he has a new home.

Mr Packer also wants to free up time to spend on key development projects underway in Sydney, Melbourne and Las Vegas. The success of its ambitious development pipeline will be critical to a group with a substantial debt pile and a mixed track record on overseas expansion plans.

Rumours have also abounded recently that Mr Packer is looking to take Crown Resorts private, with his powerful friends in private equity considered to be likely financiers of any takeover deal.

Leisure and entertainment businesses like Crown Resorts should enjoy the benefits of a strong tourism sector in 2016, although I would prefer the big yield and cheaper valuation of Crown’s Kiwi doppelganger SKYCITY Entertainment Group Limited-Ord (ASX: SKC) as an investment prospect.

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Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.