National Oilwell Varco 2015 Annual Report Download - page 101

Table of Contents
Significant components of our deferred tax assets and liabilities were as follows (in millions):
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  
Deferred tax assets:
Allowances and operating liabilities $ 491 $ 542 $ 439
Net operating loss carryforwards 170 118 51
Postretirement benefits 79 79 49
Foreign tax credit carryforwards 166 244 300
Other 21 15 39
927 998 878
Valuation allowance for deferred tax assets (63) (48) (133)
Total deferred tax assets 864 950 745
Deferred tax liabilities:
Tax over book depreciation 277 236 306
Intangible assets 1,323 1,304 1,757
Deferred income 232 257 285
Accrued U.S. tax on unremitted earnings 55 107 92
Other 209 377 164
Total deferred tax liabilities 2,096 2,281 2,604
Net deferred tax liability $1,232 $1,331 $1,859
The balance of unrecognized tax benefits at December 31, 2015 and 2014 was $46 million and $115 million, respectively. Included in the increase in the
balance of unrecognized tax benefits for the period ended December 31, 2015 was an uncertain tax position identified in a foreign jurisdiction totaling $69
million, of which the Company has settled and paid $69 million in the period. There was an increase of $14 million of unrecognized tax benefits associated
with potential transfer pricing adjustments between foreign jurisdictions and certain operating expenses that may not be deductible in foreign jurisdictions. A
$75 million reduction in the balance resulted from the completion of audits in foreign jurisdictions, and an $8 million reduction in the balance resulted from
the lapse of applicable statutes of limitations in the U.S. and foreign jurisdictions. Of the decrease of $152 million in the balance of unrecognized tax
benefits, $14 million was recorded as a reduction of income tax expense in the current year and is reflected in the “Change in tax reserve” category in the
income tax rate schedule above. These unrecognized tax benefits are included in the balance of other liabilities in the Consolidated Balance Sheet at
December 31, 2015. If the $46 million of unrecognized tax benefits accrued at December 31, 2015 are ultimately realized, the entire $46 million would be
recorded as a reduction of income tax expense.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):
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Unrecognized tax benefit at beginning of year $115 $127 $128
Additions based on tax positions related to the current year 83 3 —
Reductions for tax positions of prior years (75) — —
Settlements of audits (69) — —
Reductions for lapse of applicable statutes of limitations (8) (15) (1)
Unrecognized tax benefit at end of year $ 46 $115 $127
The Company does not anticipate that the total unrecognized tax benefits will significantly change due to the settlement of audits or the expiration of
statutes of limitation within 12 months of this reporting date.
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