Kodak 2009 Annual Report Download - page 89

87
The differences between income taxes computed using the U.S. federal income tax rate and the (benefit) provision for income taxes
for continuing operations were as follows:
For the Year Ended December 31,
(in millions) 2009 2008 2007
Amount computed using the statutory rate $ (41) $ (306) $ (90)
Increase (reduction) in taxes
resulting from:
State and other income taxes, net of federal 1 4 (15)
Foreign tax credits benefitted - - (76)
Impact of goodwill impairment - 229 -
Operations outside the U.S. 45 31 54
Valuation allowance 117 146 152
Tax settlements and adjustments, including interest (4) (248) (65)
Other, net (3) (3) (11)
Provision (benefit) for income taxes $ 115 $ (147) $ (51)
In June 2008, the Company received a tax refund from the U.S. Internal Revenue Service (“IRS”) of $581 million. The refund is
related to the audit of certain claims filed for tax years 1993-1998, and is composed of a refund of past federal income taxes paid of
$306 million and $275 million of interest earned on the refund. The federal tax refund claim related primarily to a 1994 loss
recognized on the Company’s sale of stock of a subsidiary, Sterling Winthrop Inc., which was originally disallowed under IRS
regulations in effect at that time. The IRS subsequently issued revised regulations that served as the basis for this refund.
The refund had a positive impact of $565 million on the Company’s net earnings for the year ended December 31, 2008. Of the $565
million increase in net earnings, $295 million related to the 1994 sale of Sterling Winthrop Inc., which was reflected in earnings from
discontinued operations, net of income taxes. The balance of $270 million, which represents interest, net of state income tax, was
reflected in loss from continuing operations and is included in the “Tax settlements and adjustments, including interest” line item
above. The difference between the cash refund received of $581 million and the positive net earnings impact of $565 million
represented incremental state tax expense incurred and the release of an existing income tax receivable related to the refund.