HP 2013 Annual Report Download - page 140

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 13: Taxes on Earnings (Continued)
HP has filed petitions with the U.S. Tax Court regarding certain proposed IRS adjustments
regarding tax years 1999 through 2003 and is continuing to contest additional adjustments proposed by
the IRS for other tax years. The U.S. Tax Court ruled in May 2012 against HP regarding one of the
IRS adjustments. HP intends to appeal the decision.
Tax years of HP’s U.S. group of subsidiaries providing enterprise services through 2002 have been
audited by the IRS, and all proposed adjustments have been resolved. RARs have been received for
exam years 2003, 2004, 2005, 2006, 2007 and the short period ended August 26, 2008, proposing total
tax deficiencies of $320 million. HP is contesting certain of these issues.
The IRS began an audit in 2013 of the 2010 income tax return of HP’s U.S. group of subsidiaries
providing enterprise services, and has issued an RAR for the short period ended October 31, 2008 and
the period ending October 31, 2009 proposing a total tax deficiency of $62 million. HP is contesting
certain of these issues.
With respect to major foreign and state tax jurisdictions, HP is no longer subject to tax authority
examinations for years prior to 1999. HP is subject to a foreign tax audit concerning an intercompany
transaction for fiscal 2009. The relevant taxing authority has proposed an assessment of approximately
$680 million. HP is contesting this proposed assessment.
HP believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits
that could result from IRS, foreign and state tax audit matters.
HP has not provided for U.S. federal income and foreign withholding taxes on $38.2 billion of
undistributed earnings from non-U.S. operations as of October 31, 2013 because HP intends to reinvest
such earnings indefinitely outside of the United States. If HP were to distribute these earnings, foreign
tax credits may become available under current law to reduce the resulting U.S. income tax liability.
Determination of the amount of unrecognized deferred tax liability related to these earnings is not
practicable. HP will remit non-indefinitely reinvested earnings of its non-U.S. subsidiaries for which
deferred U.S. federal and withholding taxes have been provided where excess cash has accumulated and
it determines that it is advantageous for business operations, tax or cash management reasons.
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