Sunoco 2011 Annual Report Download - page 89

The net deferred income tax liability is classified in the consolidated balance sheets as follows (in millions
of dollars):
December 31,
2011 2010
Current asset ....................................................... $286 $ 129
Noncurrent asset .................................................... 68 —
Noncurrent liability .................................................. (544) (1,390)
$(190) $(1,261)
Net cash payments (refunds) for income taxes were $45, $(375) and $141 million in 2011, 2010 and 2009,
respectively. The Company received federal income tax refunds totaling $526 and $35 million, respectively,
during 2010 and 2011 for the carryback of its 2009 net operating loss.
During 2011, Sunoco recorded a $16 million increase (net of federal income tax benefit) in the valuation
allowance on state net operating loss carryforwards in connection with the decision to exit its refining business.
The following table sets forth the changes in unrecognized tax benefits (in millions of dollars):
2011 2010 2009
Balance at beginning of year ........................................ $20 $20 $45
Additions attributable to tax positions taken in the current year ............. — 5 —
Additions attributable to tax positions taken in prior years ................. 8 — —
Reductions attributable to tax positions taken in prior years ................ (1) (5) (3)
Settlements ...................................................... (11) — (22)
Balance at end of year ............................................. $16* $20 $20
*Includes $16 million ($10 million after federal income tax benefits) related to tax positions which, if recognized, would impact the Company’s
effective tax rate.
Accruals for interest and penalties totaled $12 and $9 million at December 31, 2011 and 2010, respectively.
The Company’s federal income tax returns have been examined by the Internal Revenue Service for all
years through 2006. The federal examination for the 2007 and 2008 tax years has been completed and the
Company has entered into an agreement to resolve all issues. The Company believes that appropriate accruals
have been recorded for any potential adjustments. State and other income tax returns are generally subject to
examination for a period of three to five years after the filing of the respective returns. The state impact of any
amended federal returns remains subject to examination by various states for a period of up to one year after
formal notification of such amendments to the states. The Company and its subsidiaries have various state and
other income tax returns in the process of examination or administrative appeal. Among the issues applicable to
those tax years which are under examination, appeal or otherwise are the deductibility of certain intercompany
expenses that were claimed in the returns as filed and whether certain Sunoco entities have economic nexus in
various jurisdictions. The Company does not expect any unrecognized tax benefits pertaining to income tax
matters will significantly increase or decrease in the next twelve months.
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