Goldman Sachs 2013 Annual Report Download - page 201

Notes to Consolidated Financial Statements
The table below presents the changes in the liability for
unrecognized tax benefits. This liability is included in
“Other liabilities and accrued expenses.” See Note 17 for
further information.
As of December
in millions 2013 2012 2011
Balance, beginning of year $2,237 $1,887 $2,081
Increases based on tax positions
related to the current year 144 190 171
Increases based on tax positions
related to prior years 149 336 278
Decreases related to tax positions
of prior years (471) (109) (41)
Decreases related to settlements (299) (35) (638)
Acquisitions/(dispositions) —(47) 47
Exchange rate fluctuations 515 (11)
Balance, end of year $1,765 $2,237 $1,887
Related deferred income tax asset 1475 685 569
Net unrecognized tax benefit 2$1,290 $1,552 $1,318
1. Included in “Other assets.” See Note 12.
2. If recognized, the net tax benefit would reduce the firm’s effective income
tax rate.
Regulatory Tax Examinations
The firm is subject to examination by the U.S. Internal
Revenue Service (IRS) and other taxing authorities in
jurisdictions where the firm has significant business
operations, such as the United Kingdom, Japan, Hong
Kong, Korea and various states, such as New York. The tax
years under examination vary by jurisdiction. The firm does
not expect completion of these audits to have a material
impact on the firm’s financial condition but it may be
material to operating results for a particular period,
depending, in part, on the operating results for that period.
The table below presents the earliest tax years that remain
subject to examination by major jurisdiction.
Jurisdiction
As of
December 2013
U.S. Federal 2008
New York State and City 2004
United Kingdom 2008
Japan 2010
Hong Kong 2006
Korea 2010
For U.S. Federal, IRS examinations of fiscal 2008 through
calendar 2010 began in 2011. IRS examinations of fiscal
2005 through 2007 were finalized during the third quarter
of 2013. The field work for the examinations of 2008
through 2010 has been completed but the examinations
have not been administratively finalized. The examinations
of 2011 and 2012 began in 2013.
New York State and City examinations of fiscal 2004
through 2006 began in 2008. The examinations of fiscal
2007 through 2010 began in 2013.
All years subsequent to the years in the table above remain
open to examination by the taxing authorities. The firm
believes that the liability for unrecognized tax benefits it has
established is adequate in relation to the potential for
additional assessments.
In January 2013, the firm was accepted into the
Compliance Assurance Process program by the IRS. This
program allows the firm to work with the IRS to identify
and resolve potential U.S. federal tax issues before the filing
of tax returns. The 2013 tax year is the first year being
examined under the program. The firm was accepted into
the program again for the 2014 tax year.
Goldman Sachs 2013 Annual Report 199