Google 2013 Annual Report Download - page 80

 GOOGLE INC.
PART II
ITEM8.Notes to Consolidated Financial Statements
AsofDecember31,2013,ourfederalandstatecapitallosscarryforwardsforincometaxpurposeswereapproximately$349million
and$560million.Wealsohavedeferredtaxassetsforimpairmentlossesthat,ifrecognized,willbecapitalinnature.Webelieve
thatitismorelikelythannotthatourdeferredtaxassetsforcapitallossesandimpairmentlosseswillnotberealized.Therefore,
wehaverecordedavaluationallowanceonbothourfederalandstatedeferredtaxassetsfortheseitems.Wewillreassessthe
valuationallowancequarterlyandiffutureevidenceallowsforapartialorfullreleaseofthevaluationallowance,ataxbenet
willberecordedaccordingly.
InDecember2012,weenteredintoanagreementwithArrisGroupInc.(Arris)forthedispositionoftheMotorolaHomesegment.
AdeferredtaxassetwasestablishedforthebooktotaxbasisdierenceinourinvestmentintheMotorolaHomesegmentupon
signingtheagreementbecausethebasisdierencewasgoingtoberecognizedintheforeseeablefuture.InApril2013,upon
thedispositionoftheHomesegmenttoArris,ourbasisdierenceintheHomesegmentbecameabasisdierenceinGoogle’s
investmentinArrissharesreceivedinthedispositionandwasadjustedbytheamountofcashreceivedaspartofthetransaction.
SinceanyfuturelossestoberecognizeduponthedispositionofArrisshareswillbecapitallossesandwealreadyhaveanexcess
capitallosscarryforward,afullvaluationallowancewasrecordedagainstthisdeferredtaxasset.Wewillreassessthevaluation
allowancequarterlyandiffutureevidenceallowsforapartialorfullreleaseofthevaluationallowance,ataxbenetwillbe
recordedaccordingly.
Uncertain Tax Positions
ThefollowingtablesummarizestheactivityrelatedtoourgrossunrecognizedtaxbenetsfromJanuary1,2011toDecember31,
2013(inmillions):
BalanceasofJanuary1,2011 $1,140
Increasesrelatedtoprioryeartaxpositions 77
Decreasesrelatedtoprioryeartaxpositions (9)
Decreasesrelatedtosettlementwithtaxauthorities (5)
Increasesrelatedtocurrentyeartaxpositions 361
BalanceasofDecember31,2011 1,564
Increasesrelatedtoprioryeartaxpositions 43
Decreasesrelatedtoprioryeartaxpositions (40)
Decreasesrelatedtosettlementwithtaxauthorities (62)
Increasesrelatedtoacquisition 17
Increasesrelatedtocurrentyeartaxpositions 411
BalanceasofDecember31,2012 1,933
Increasesrelatedtoprioryeartaxpositions 158
Decreasesrelatedtoprioryeartaxpositions (37)
Decreasesrelatedtosettlementwithtaxauthorities (78)
Increasesrelatedtocurrentyeartaxpositions 595
BalanceasofDecember31,2013 $2,571
Ourtotalunrecognizedtaxbenetsthat,ifrecognized,wouldaectoureectivetaxratewere$1,350million,$1,749million,and
$2,378millionasofDecember31,2011,2012,and2013.
AsofDecember31,2012and2013,wehadaccrued$139millionand$181millionforpaymentofinterestandpenalties.Interest
andpenaltiesincludedinourprovisionforincometaxeswerenotmaterialinalltheperiodspresented.
Weandoursubsidiariesareroutinelyexaminedbyvarioustaxingauthorities.AlthoughweleU.S.federal,U.S.state,andforeign
taxreturns,ourtwomajortaxjurisdictionsaretheU.S.andIreland.DuringthequarterendedDecember31,2007,theIRS
completeditsexaminationofour2003and2004taxyears.WehaveledanappealwiththeIRSforcertainissuesrelatedtothis
auditandsettlementswerereachedin2012onallbutoneissuewhichweplantolitigateincourt.Asaresultwereleasedthe
relatedreservesinthequarterendedDecember31,2012.TheIRSiscurrentlyinexaminationofour2007,2008,and2009tax
years.Weexpecttheexaminationtobecompletedwithinthenext12months,butwedonotanticipateanysignicantimpactto
ourunrecognizedtaxbenetbalanceasofDecember31,2013,relatedtoour2007,2008,and2009taxyears.
Our2010,2011,2012and2013taxyearsremainsubjecttoexaminationbytheIRSforU.S.federaltaxpurposes,andour2006
through2013taxyearsremainsubjecttoexaminationbytheappropriategovernmentalagenciesforIrishtaxpurposes.There
arevariousotherongoingauditsinvariousotherjurisdictionsthatarenotmaterialtoournancialstatements.
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