Texas Instruments 2014 Annual Report Download - page 51

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FORM 10-K
Cash payments made for income taxes, net of refunds, were $1.104 billion, $569 million and $171 million for the years ended
December 31, 2014, 2013 and 2012, respectively.
Uncertain tax positions
We operate in a number of tax jurisdictions, and our income tax returns are subject to examination by tax authorities in those
jurisdictions who may challenge any item on these tax returns. Because the matters challenged by authorities are typically complex,
their ultimate outcome is uncertain. Before any benefit can be recorded in the financial statements, we must determine that it is “more
likely than not” that a tax position will be sustained by the appropriate tax authorities. We recognize accrued interest related to uncertain
tax positions and penalties as components of OI&E.
The changes in the total amounts of uncertain tax positions are summarized as follows:
2014 2013 2012
Balance, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 91 $ 184 $ 210
Additions based on tax positions related to the current year . . . . . . . . . . . . . . . . . . . . . . . 10 7 12
Additions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 19 45
Reductions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9) (10) (92)
Settlements with tax authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36) (96) 39
Expiration of the statute of limitations for assessing taxes . . . . . . . . . . . . . . . . . . . . . . . . —(13) (30)
Balance, December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 108 $ 91 $ 184
Interest income (expense) recognized in the year ended December 31 . . . . . . . . . . . . . . . . . . $ 6 $ (10) $ 32
Interest receivable (payable) as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ (5) $ 8
The liability for uncertain tax positions and interest payable are components of Deferred credits and other liabilities on our Consolidated
Balance Sheets. Interest receivable is a component of Other assets on our Consolidated Balance Sheets.
The $108 million liability for uncertain tax positions as of December 31, 2014, is comprised of positions that, if recognized, would impact
the tax rate. If these tax liabilities are ultimately realized, $56 million of existing deferred tax assets would also be realized, related to
refunds from counterparty jurisdictions resulting from procedures for relief from double taxation. Regarding the $108 million liability:
•฀ About $76 million of the liability represents uncertain tax positions for tax years in jurisdictions in which audit assessments
have not been made. Of this liability, $52 million relates to the cumulative effect of a tax depreciation-related method change.
The balance of this liability is primarily related to transfer pricing issues for which procedures for relief from double taxation will
mitigate the tax rate impact of any difference between the actual tax assessments and our estimates.
•฀ About $32 million of the liability represents audit assessments. Of the liability, $29 million is related to transfer pricing issues for
which there are ongoing procedures for relief from double taxation. Settlement of the $29 million is subject to timely completion
of the tax treaty processes and a significant portion of that liability may be settled within the next 12 months. Settlement will not
have a significant tax rate impact, as the tax rates of the counterparty jurisdictions are similar.
All of the $91 million liability for uncertain tax positions as of December 31, 2013, is made up of positions that, if recognized, would
impact the tax rate. If these tax liabilities are ultimately realized, $76 million of deferred tax assets would also be realized, primarily
related to refunds from counterparty jurisdictions resulting from procedures for relief from double taxation.
As of December 31, 2014, the statute of limitations remains open for U.S. federal tax returns for 2010 and following years. Audit
activities related to our U.S. federal tax returns through 2009 have been completed except for certain pending tax treaty procedures for
relief from double taxation and the review of refunds claimed on amended returns for years prior to 2010. The procedures for relief from
double taxation pertain to U.S. federal tax returns for the years 2004 through 2010.
In non-U.S. jurisdictions, the years open to audit represent the years still open under the statute of limitations. With respect to major
jurisdictions outside the United States, our subsidiaries are no longer subject to income tax audits for years before 2007.