Pfizer 2012 Annual Report Download - page 49

Download and view the complete annual report

Please find page 49 of the 2012 Pfizer annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 121

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121

Financial Review
Pfizer Inc. and Subsidiary Companies
48
2012 Financial Report
Tax Matters
We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business for tax matters (see Notes
to Consolidated Financial Statements—Note 5D. Tax Matters: Tax Contingencies).
We account for income tax contingencies using a benefit recognition model. If our initial assessment fails to result in the recognition of a tax
benefit, we regularly monitor our position and subsequently recognize the tax benefit: (i) if there are changes in tax law, analogous case law or
there is new information that sufficiently raise the likelihood of prevailing on the technical merits of the position to more likely than not; (ii) if the
statute of limitations expires; or (iii) if there is a completion of an audit resulting in a favorable settlement of that tax year with the appropriate
agency. We regularly re-evaluate our tax positions based on the results of audits of federal, state and foreign income tax filings, statute of
limitations expirations, changes in tax law or receipt of new information that would either increase or decrease the technical merits of a
position relative to the “more-likely-than-not” standard.
Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but our estimates of
unrecognized tax benefits and potential tax benefits may not be representative of actual outcomes, and variation from such estimates could
materially affect our financial statements in the period of settlement or when the statutes of limitations expire, as we treat these events as
discrete items in the period of resolution. Finalizing audits with the relevant taxing authorities can include formal administrative and legal
proceedings, and, as a result, it is difficult to estimate the timing and range of possible changes related to our uncertain tax positions, and such
changes could be significant.