Morgan Stanley 2014 Annual Report Download - page 293

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The Company believes that the resolution of these tax matters will not have a material effect on the Company’s
consolidated statements of financial condition, although a resolution could have a material impact on the
Company’s consolidated statements of income for a particular future period and on the Company’s effective
income tax rate for any period in which such resolution occurs. The Company has established a liability for
unrecognized tax benefits that the Company believes is adequate in relation to the potential for additional
assessments. Once established, the Company adjusts unrecognized tax benefits only when more information is
available or when an event occurs necessitating a change.
The Company periodically evaluates the likelihood of assessments in each taxing jurisdiction resulting from the
expiration of the applicable statute of limitations or new information regarding the status of current and
subsequent years’ examinations. As part of the Company’s periodic review, federal and state unrecognized tax
benefits were released or remeasured. As a result of this remeasurement, the income tax provision included a
discrete tax benefit of $609 million, $161 million and $299 million in 2014, 2013 and 2012, respectively.
Additionally, due to new information regarding the status of the IRS field examination referred to above, the
2014 total amount of unrecognized tax benefits decreased by $2.0 billion.
It is reasonably possible that significant changes in the gross balance of unrecognized tax benefits may occur
within the next 12 months related to certain tax authority examinations referred to above. At this time, however,
it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits and
impact on the Company’s effective tax rate over the next 12 months.
The following are the major tax jurisdictions in which the Company and its affiliates operate and the earliest tax
year subject to examination:
Jurisdiction Tax Year
U.S. ............................................................................... 1999
New York State and City .............................................................. 2007
Hong Kong ......................................................................... 2007
U.K. .............................................................................. 2010
Japan .............................................................................. 2012
21. Segment and Geographic Information.
Segment Information.
The Company structures its segments primarily based upon the nature of the financial products and services provided
to customers and the Company’s management organization. The Company provides a wide range of financial products
and services to its customers in each of its business segments: Institutional Securities, Wealth Management and
Investment Management. For a further discussion of the Company’s business segments, see Note 1.
Revenues and expenses directly associated with each respective business segment are included in determining its
operating results. Other revenues and expenses that are not directly attributable to a particular business segment
are allocated based upon the Company’s allocation methodologies, generally based on each business segment’s
respective net revenues, non-interest expenses or other relevant measures.
As a result of revenues and expenses from transactions with other operating segments being treated as
transactions with external parties, the Company includes an Intersegment Eliminations category to reconcile the
business segment results to the Company’s consolidated results. Intersegment Eliminations also reflect the effect
of fees paid by the Company’s Institutional Securities business segment to the Company’s Wealth Management
business segment related to the bank deposit program.
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