Google 2009 Annual Report Download - page 112

Google Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Uncertain Tax Positions
The following table summarizes the activity related to our gross unrecognized tax benefits from January 1,
2007 to December 31, 2009 (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
Balance as of December 31, 2007 ........................................................... 387,187
Increases related to prior year tax positions ................................................... 111,872
Decreases related to prior year tax positions ................................................... (14,563)
Increases related to current year tax positions ................................................. 236,564
Balance as of December 31, 2008 ........................................................... 721,060
Increases related to prior year tax positions ................................................... 221,575
Decreases related to prior year tax positions ................................................... (816)
Increases related to current year tax positions ................................................. 245,909
Balance as of December 31, 2009 ........................................................... $1,187,728
Our total unrecognized tax benefits that, if recognized, would affect our effective tax rate were $283.5 million,
$561.3 million, and $814.4 million as of December 31, 2007, December 31, 2008, and December 31, 2009.
As of December 31, 2009, we had accrued $100.0 million for payment of interest and penalties. Interest and
penalties included in our provision for income taxes was not material in all the periods presented.
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 three months
ended December 31, 2007, the Internal Revenue Service (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 12 months. The IRS commenced its examination of our 2005 and
2006 tax years in early 2008. We do not expect the examination to be completed within the next 12 months,
therefore we do not anticipate any significant impact to our unrecognized tax benefit balance in 2009, related to
our 2005 and 2006 tax years.
Our 2007, 2008, and 2009 tax years remain subject to examination by the IRS for U.S. federal tax purposes,
and our 2002 through 2009 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 15. 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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