At least that's what the Internal Revenue Service is maintaining 41 years later.
The IRS told Redstone earlier this year that he owes $1.1 million in taxes and penalties, plus interest, because of the gift. The case involves stock in the family's National Amusements received by Redstone's son, Brent, and his daughter, Shari, after the settlement of an intrafamily lawsuit.
"This is unheard of," said Richard Behrendt, a former IRS estate and gift tax auditor who is now director of estate planning at Robert W. Baird & Co. in Milwaukee. "I can't remember ever hearing of anybody going back 41 years to raise an issue. It's really unprecedented in my experience."
Redstone, the billionaire chairman of Viacom and CBS, argues in his April 10 petition to the U.S. Tax Court that what the IRS called a taxable gift was instead the result of an intrafamily lawsuit and an "ordinary business transaction."
Redstone, who turns 90 this month, is worth $4.9 billion, according to the Bloomberg Billionaires Index. He started his career on the other side of tax disputes as a lawyer for the Department of Justice.
Redstone then joined his family's movie theater company before taking over Viacom and CBS. As chairman of both companies, he controls the CBS television network, Showtime, Paramount Pictures and MTV.
According to the petition, the "bitter family dispute" in the early 1970s involved Sumner Redstone's late brother, Edward, who had left the business and "threatened" to sell his shares outside the family. The settlement ended up directing some of the shares in National Amusements to Edward's and Sumner's children.
"Despite many opportunities during 41 years," Redstone's petition says, the IRS "has never before claimed" that he made taxable gifts in 1972.
The statute of limitations doesn't apply in cases where no tax return was filed, Behrendt said.
"At some point, it becomes impractical to go back this far," he said. "It sends a really troublesome message to the public."
Edward Redstone died in 2011. His estate filed a separate Tax Court case April 15. Behrendt said the IRS could have opened a case against Sumner Redstone because of issues that surfaced during an audit of his brother's estate.
Anthony Burke, a spokesman for the IRS, said the agency generally doesn't comment on pending litigation.
David Andelman, Sumner Redstone's attorney at Lourie & Cutler P.C. in Boston, didn't immediately return a call for comment. Andelman is a director of CBS and National Amusements.
Redstone made plans for a trust to manage his controlling shares in CBS and Viacom upon his death. Under the current terms, the trust will be managed by a board including Viacom CEO Philippe Dauman and Shari Redstone, according to the people familiar with the matter, Bloomberg reported April 21.