Motorola 2008 Annual Report Download - page 113

capital losses related to certain investments. The Company believes that the remaining deferred tax assets are more
likely than not to be realizable based on estimates of future taxable income and the implementation of tax
planning strategies.
Tax carryforwards at December 31, 2008 are as follows:
Gross
Tax Loss Tax Effected Expiration Period
United States:
U.S. tax losses $2,354 $ 824 2017-2028
Foreign tax credits n/a 1,111 2012-2018
General business credits n/a 453 2018-2028
Minimum tax credits n/a 102 Unlimited
State tax losses 3,616 112 2009-2028
State tax credits n/a 56 2009-2024
Non-U.S. Subsidiaries:
China tax losses 143 30 2012-2013
United Kingdom tax losses 223 63 Unlimited
Germany tax losses 316 91 Unlimited
Other subsidiaries tax losses 244 64 Various
Spain tax credits n/a 32 2014-2022
Other subsidiaries tax credits n/a 63 Unlimited
$3,001
The Company adopted FIN 48 on January 1, 2007. The adoption resulted in a $120 million reduction of the
Company’s unrecognized tax benefits and related interest accrual and has been reflected as an increase in the
opening balance of Retained earnings of $27 million and Additional paid-in capital of $93 million as of January 1,
2007. Upon the adoption of FIN 48, the Company also reclassified unrecognized tax benefits of $877 million from
Deferred income tax to Other liabilities in the Company’s consolidated balance sheets.
A reconciliation of unrecognized tax benefits, including those attributable to discontinued operations, is as
follows:
2008 2007
Balance at January 1 $1,400 $1,274
Additions based on tax positions related to current year 46 46
Additions for tax positions of prior years 141 197
Reductions for tax positions of prior years (642) (114)
Settlements (31) (3)
Balance at December 31 $ 914 $1,400
Included in the balance of total unrecognized tax benefits at December 31, 2008 and 2007, are potential
benefits of approximately $790 million and $590 million, respectively, net of federal tax benefits that if recognized
would affect the effective tax rate.
During the fourth quarter of 2008, the Company entered into closing agreements with the appellate level of
the Internal Revenue Service (“IRS”) on transfer pricing adjustments for tax years 1996 through 2003 and the IRS
completed its review of the research credit, thereby resolving all significant IRS audit issues for years 1996-2003.
The IRS also completed its field examination of the Company’s 2004 and 2005 tax returns in July 2008, and there
are no significant unagreed issues. As a result of the foregoing and resolution of Non-U.S. audits, the Company
reduced its unrecognized income tax benefits. The Company expects to receive a net tax refund of $126 million,
primarily relating to refund claims that were held pending the resolution of the 1996-2003 tax years.
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