Google 2007 Annual Report Download - page 108

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Google Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table summarizes the activity related to our gross unrecognized tax benefits from January 1, 2007 to
December 31, 2007 (in thousands):
Balance as of January 1, 2007 .................................................................. $243,588
Increases related to prior year tax positions ....................................................... 29,854
Decreases related to prior year tax positions ...................................................... (18,997)
Increases related to current year tax positions ..................................................... 132,742
Decreases related to settlements with taxing authorities ............................................ —
Decreases related to lapsing of statute of limitations ................................................ —
Balance as of December 31, 2007 ............................................................... $387,187
Our total unrecognized tax benefits that, if recognized, would affect our effective tax rate were $195.7 million and
$283.5 million as of January 1, 2007 and December 31, 2007
As of December 31, 2007, we had accrued $14 million for payment of interest. Interest included in our provision for
income taxes was not material in all the periods presented. We have not accrued any penalties related to our uncertain tax
positions as we believe that it is more likely than not that there will not be any assessment of penalties.
We and our subsidiaries are routinely examined by various taxing authorities. Although we file U.S. federal, U.S.
state, and foreign tax returns, our two major tax jurisdictions are the U.S. and Ireland. During the fourth quarter ended
December 31, 2007, IRS completed its examination of our 2003 and 2004 tax years. We have filed an appeal with the IRS
for certain issues related to this audit, but we believe we have adequately provided for these items and any adverse results
would have an immaterial impact on our unrecognized tax benefit balance within the next twelve months. The IRS will
commence its examination of our 2005 and 2006 tax years in early 2008. We do not expect the examination to be
completed within the next twelve months, therefore we do not anticipate any significant impact to our unrecognized tax
benefit balance in 2008, related to 2005 and 2006 tax years.
Our 2003 through 2007 tax years remain subject to examination by the IRS for U.S. federal tax purposes, and our
2002 through 2007 tax years remain subject to examination by the appropriate governmental agencies for Irish tax
purposes. There are various other on-going audits in various other jurisdictions that are not material to our financial
statements.
Note 14. Information about Geographic Areas
Our chief operating decision-makers (i.e., chief executive officer, certain of his direct reports and our founders)
review financial information presented on a consolidated basis, accompanied by disaggregated information about
revenues by geographic region for purposes of allocating resources and evaluating financial performance. There are no
segment managers who are held accountable by our chief operating decision-makers, or anyone else, for operations,
operating results and planning for levels or components below the consolidated unit level. Accordingly, we consider
ourselves to be in a single reporting segment and operating unit structure.
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