HP 2015 Annual Report Download - page 138

Table of Contents
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The deferred tax asset valuation allowance and changes were as follows:
Gross deferred tax assets at October 31, 2015, 2014 and 2013 were reduced by valuation allowances of $9.9 billion, $11.9 billion and $11.4 billion,
respectively. Total valuation allowance decreased by $2 billion in fiscal 2015 associated with the reversal of a valuation allowance against deferred tax
assets in the U.S., and increased by $525 million in fiscal 2014, associated primarily with foreign net operating losses.
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In connection with the Separation, HP entered into a Tax Matters Agreement (the "Tax Matters Agreement") with Hewlett Packard Enterprise effective on
November 1, 2015 that governs the rights and obligations of HP and Hewlett Packard Enterprise for certain pre-Separation tax liabilities. The Tax Matters
Agreement provides that HP and Hewlett Packard Enterprise will share certain pre-Separation income tax liabilities that arise from adjustments made by tax
authorities to HP and Hewlett Packard Enterprise's U.S. and certain non-U.S. income tax returns. In certain jurisdictions HP and Hewlett Packard Enterprise
have joint and several liability for past income tax liabilities and accordingly, HP could be legally liable under applicable tax law for such liabilities and
required to make additional tax payments.
In addition, if the distribution of Hewlett Packard Enterprise's common shares to the HP stockholders is determined to be taxable, Hewlett Packard
Enterprise and HP would share the tax liability equally, unless the taxability of the distribution is the direct result of action taken by either Hewlett Packard
Enterprise or HP subsequent to the distribution in which case the party causing the distribution to be taxable would be responsible for any taxes imposed on
the distribution.
Upon completion of the Separation on November 1, 2015, HP recorded a net payable to Hewlett Packard Enterprise of $390 million for certain tax
liabilities that Hewlett Packard Enterprise is joint and severally liable for, but for which it is indemnified by HP under the Tax Matters Agreement. The actual
amount that HP may be obligated to pay could vary depending upon the outcome of certain unresolved tax matters, which may not be resolved for several
years.
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     
   
Balance at beginning of year $ 11,915 $ 11,390 $ 10,223
Income tax (benefit) expense (1,657) 184 1,644
Other comprehensive income, currency translation and charges to other accounts (380) 341 (477)
Balance at end of year $ 9,878 $ 11,915 $ 11,390
Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠
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