Kraft 2010 Annual Report Download - page 95
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The changes in our unrecognized tax benefits for the years ended December 31, 2010, 2009 and 2008 were (in millions):
2010 2009 2008
January 1 $ 829 $ 807 $ 850
Increases from
positions taken
during prior periods 49 90 17
Decreases from
positions taken
during prior periods (146) (205) (90)
Increases from
positions taken
during the current
period 229 146 98
(Decreases) /
increases from
acquisition
adjustments 357 - (22)
Decreases relating to
settlements with
taxing authorities (19) (26) (8)
Reductions resulting
from the lapse of
the applicable
statute of
limitations (10) (14) (13)
Currency / other (8) 31 (25)
December 31 $ 1,281 $ 829 $ 807
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 2004 and
onward. During 2010, we reached a final resolution on a federal tax audit for the years 2000 through 2003. In addition, we are currently under examination by
tax 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 Australia (2008 onward), Brazil (2005 onward), Canada
(2003 onward), France (2006 onward), Germany (1999 onward), India (2003 onward), Russia (2004 onward), Spain (2002 onward), and United Kingdom
(2006 onward).
At December 31, 2010, applicable U.S. federal income taxes and foreign withholding taxes had not been provided on approximately $8.4 billion of
accumulated earnings of foreign subsidiaries that are expected to be permanently reinvested. It is impractical for us to determine the amount of unrecognized
deferred tax liabilities on these permanently reinvested earnings.
The effective income tax rate on pre-tax earnings differed from the U.S. federal statutory rate for the following reasons for the years ended December 31,
2010, 2009 and 2008:
2010 2009 2008
(2009 & 2008 revised)
U.S. federal statutory
rate 35.0% 35.0% 35.0%
Increase / (decrease)
resulting from:
State and local
income taxes, net
of federal tax
benefit excluding
IRS audit impacts 1.9% 1.9% 2.7%
Benefit principally
related to reversal
of federal and state
reserves on IRS
audit settlements (2.3%) (3.1%) -
Reversal of other tax
accruals no longer
required (0.5%) (0.4%) (1.8%)
U.S. Health Care
Legislation 3.8% - -
Foreign rate
differences (6.0%) (2.2%) (5.7%)
Other (0.4%) (2.4%) (2.0%)
Effective tax rate 31.5% 28.8% 28.2%