Motorola 2015 Annual Report Download - page 68

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Components of income tax expense (benefit) are as follows:
Years ended December 31 2015 2014 2013
United States $71$14$29
Other nations 30 67 234
States (U.S.) 13 11 12
Current income tax expense 114 92 275
United States 154 (503) (368)
Other nations (13) (11) 35
States (U.S.) 19 (43) (1)
Deferred income tax expense (benefit) 160 (557) (334)
Total income tax expense (benefit) $ 274 $ (465) $ (59)
Deferred tax balances that were recorded within Accumulated other comprehensive loss in the Company’s consolidated
balance sheets resulted from retirement benefit adjustments, currency translation adjustments, net gains (losses) on derivative
instruments and fair value adjustments to available-for-sale securities. The adjustments were $(62) million, $286 million, and
$606 million for the years ended December 31, 2015, 2014, and 2013, respectively.
The Company evaluates its permanent reinvestment assertions with respect to foreign earnings at each reporting period
and, except for certain earnings that the Company intends to reinvest indefinitely due to the capital requirements of the foreign
subsidiaries or due to local country restrictions, accrues for the U.S. federal and foreign income tax applicable to the earnings.
During the fourth quarter of 2015, the Company reassessed its unremitted earnings position and concluded that certain of its
non-U.S. subsidiaries’ earnings were permanently reinvested overseas. The Company intends to utilize these offshore earnings
for working capital needs in its international operations. During 2015, the Company recorded a net tax benefit of $8 million
related to the reversal of related deferred tax liabilities. During 2014, the Company recorded a net tax benefit of $19 million
related to the reversal of deferred tax liabilities related to undistributed foreign earnings due to the change in permanent
reinvestment assertion. During 2013, the Company reassessed its unremitted earnings position concluding that certain of its
non-U.S. subsidiaries' earnings were permanently reinvested overseas. As a result, the Company recognized a tax benefit of
$25 million during 2013 for the reversal of related deferred tax liabilities.
Undistributed earnings that the Company intends to reinvest indefinitely, and for which no U.S. income taxes have been
provided, aggregate to $1.4 billion at December 31, 2015. The Company currently has no plans to repatriate the foreign earnings
permanently reinvested and therefore, the time and manner of repatriation is uncertain. If circumstances change and it becomes
apparent that some or all of the permanently reinvested earnings will be remitted to the U.S. in the foreseeable future, an
additional income tax charge may be necessary. However, given the uncertain repatriation time and manner at December 31,
2015, it is not practicable to estimate the amount of any additional income tax charge on the hypothetical distribution of
permanently reinvested earnings. On a cash basis, these repatriations from the Company's non-U.S. subsidiaries could require
the payment of additional taxes. The portion of earnings not reinvested indefinitely may be distributed without an additional
charge given the U.S. federal and foreign income tax accrued on undistributed earnings and the utilization of available foreign
tax credits.
In 2013, the Company reorganized certain of its non-U.S. subsidiaries under a holding company structure in order to
facilitate the efficient movement of non-U.S. cash and provide a platform to fund foreign investments, such as potential
acquisitions and capital expenditures. During 2013, the Company recognized a $337 million tax benefit associated with the
excess tax credits relating to the earnings of certain non-U.S. subsidiaries reorganized under the holding company structure.