Kroger 2010 Annual Report Download - page 128

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A-48
NO T E S T O CO N S O L I D A T E D FI N A N C I A L ST A T E M E N T S , CO N T I N U E D
A reconciliation of the beginning and ending amount of unrecognized tax benefits, including positions
impacting only the timing of tax benefits, is as follows:
2010 2009 2008
Beginning balance ..................................... $ 586 $492 $469
Additions based on tax positions related to the current year . . . . 38 111 53
Reductions based on tax positions related to the current year . . . (237) (4) (6)
Additions for tax positions of prior years .................... 13 33 4
Reductions for tax positions of prior years . . . . . . . . . . . . . . . . . . (51) (16) (11)
Settlements ........................................... (16) (30) (17)
Ending balance ........................................ $ 333 $586 $492
The Company does not anticipate that changes in the amount of unrecognized tax benefits over the
next twelve months will have a significant impact on its results of operations or financial position.
As of January 29, 2011, January 30, 2010 and January 31, 2009, the amount of unrecognized tax benefits
that, if recognized, would impact the effective tax rate was $116, $132 and $116 respectively.
To the extent interest and penalties would be assessed by taxing authorities on any underpayment
of income tax, such amounts have been accrued and classified as a component of income tax expense.
During the years ended January 29, 2011, January 30, 2010 and January 31, 2009, the Company recognized
approximately $(2), $4 and $6 respectively, in interest and penalties (recoveries). The Company had
accrued approximately $101 and $108 for the payment of interest and penalties as of January 29, 2011 and
January 30, 2010, respectively.
The IRS concluded a field examination of the Company’s 2005 – 2007 U.S. tax returns during the second
quarter of 2010 and is currently auditing years 2008 – 2009. The audit is not expected to be completed in
the next twelve months. Additionally, the Company has a case in the U.S. Tax Court. A favorable ruling on
the Company’s motion for partial summary judgment was issued on January 27, 2011. A final decision in the
case, and the filing of any appeals, should occur within the next 12 months. Refer to Note 11 for additional
information regarding this U.S. Tax Court case. In connection with this case, the Company has extended
the statute of limitations on our tax years after 1991 and those years remain open to examination. States
have a limited time frame to review and adjust federal audit changes reported. Assessments made and
refunds allowed are generally limited to the federal audit changes reported.