Kraft 2009 Annual Report Download - page 229

Income Taxes:
Income Taxes:
(USD $)
12 Months Ended
12/31/2009
Income Taxes: Note 14. Income Taxes:
Earnings from continuing operations before income taxes and the provision for income taxes consisted of the following for the
years ended December 31, 2009, 2008 and 2007:
2009 2008 2007
(in millions)
Earnings from continuing operations
before income taxes:
United States $ 2,323 $ 1,341 $ 2,325
Outside United States 1,964 1,262 1,247
Total $ 4,287 $ 2,603 $ 3,572
Provision for income taxes:
United States federal:
Current $ 425 $ 392 $ 649
Deferred 108 (13) (270)
533 379 379
State and local:
Current 95 62 175
Deferred (39) (21) (69)
56 41 106
Total United States 589 420 485
Outside United States:
Current 701 507 649
Deferred (31) (172) (54)
Total outside United States 670 335 595
Total provision for income taxes $ 1,259 $ 755 $ 1,080
Additionally, the 2008 earnings and gain from discontinued operations from the split-off of the Post cereals business included a net
tax benefit of $104 million.
As of January 1, 2009, our unrecognized tax benefits were $807 million. If we had recognized all of these benefits, the net impact
on our income tax provision would have been $612 million. Our unrecognized tax benefits were $829 million at December 31,
2009, and if we had recognized all of these benefits, the net impact on our income tax provision would have been $661 million. We
do not expect a significant change in our unrecognized tax benefits during the next 12 months. As this disclosure was made as of
December 31, 2009, it does not reflect the impacts of our recent acquisition and divestiture activity. We include accrued interest
and penalties related to uncertain tax positions in our tax provision. We had accrued interest and penalties of $239 million as of
January 1, 2009 and $210 million as of December 31, 2009. Our 2009 provision for income taxes included a $26 million net
benefit for interest and penalties as reversals exceeded expense accruals during the year, due to agreements reached with the
IRS on specific matters, settlements with various foreign and state tax authorities and the expiration of the statutes of limitations in
various jurisdictions. We also paid interest and penalties of $10 million during 2009.
The changes in our unrecognized tax benefits for the years ended December 31, 2009, 2008 and 2007 were (in millions):
2009 2008 2007
January 1 $ 807 $ 850 $ 667
Increases from positions taken during prior periods 90 17 131
Decreases from positions taken during prior periods (205) (90) (23)
Increases from positions taken during the current period 146 98 34
(Decreases) / increases from acquisition adjustments - (22) 72
Decreases relating to settlements with taxing authorities (26) (8) (38)
Reductions resulting from the lapse of the applicable
statute of limitations (14) (13) (6)
Currency / other 31 (25) 13
December 31 $ 829 $ 807 $ 850
We are regularly examined by federal and various state and foreign tax authorities. The U.S. federal statute of limitations remains
open for the year 2000 and onward. During 2009, we reached an agreement with the IRS on specific matters related to years
2000 through 2003. Our returns for those years are still under examination, and the IRS recently began its examination of years
2004 through 2006. In addition, we are currently under examination by taxing authorities in various U.S. state and foreign
jurisdictions. U.S. state and foreign jurisdictions have statutes of limitations generally ranging from three to five years. Years still
open to examination by foreign tax authorities in major jurisdictions include Germany (1999 onward), Brazil (2003 onward),
Canada (2003 onward), Spain (2002 onward) and France (2006 onward).
Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠