Xerox 2014 Annual Report Download - page 128
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A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
2014 2013 2012
Balance at January 1 $267 $201 $225
Additions related to current year 16 60 28
Additions related to prior years positions 10 39 5
Reductions related to prior years positions (35)(19)(36)
Settlements with taxing authorities(1) (10)—(13
)
Reductions related to lapse of statute of limitations (6) (14)(8)
Currency (2) ——
Balance at December 31 $240 $267 $201
_______________
(1) Majority of settlements did not result in the utilization of cash.
Included in the balances at December 31, 2014, 2013 and 2012 are $39, $36 and $16, respectively, of tax positions
that are highly certain of realizability but for which there is uncertainty about the timing or that they may be reduced
through an indirect benefit from other taxing jurisdictions. Because of the impact of deferred tax accounting, other
than for the possible incurrence of interest and penalties, the disallowance of these positions would not affect the
annual effective tax rate.
We recognized interest and penalties accrued on unrecognized tax benefits, as well as interest received from
favorable settlements within income tax expense. We had $17, $20 and $20 accrued for the payment of interest and
penalties associated with unrecognized tax benefits at December 31, 2014, 2013 and 2012, respectively.
In the U.S., with the exception of ACS, we are no longer subject to U.S. federal income tax examinations for years
before 2009. ACS is no longer subject to such examinations for years before 2005. With respect to our major
foreign jurisdictions, we are no longer subject to tax examinations by tax authorities for years before 2003.
Deferred Income Taxes
We have not provided deferred taxes on approximately $8.5 billion of undistributed earnings of foreign subsidiaries
and other foreign investments carried at equity at December 31, 2014, as such undistributed earnings have been
determined to be indefinitely reinvested and we currently do not plan to initiate any action that would precipitate a
deferred tax impact. We do not believe it is practical to calculate the potential deferred tax impact, as there is a
significant amount of uncertainty with respect to determining the amount of foreign tax credits as well as any
additional local withholding tax and other indirect tax consequences that may arise from the distribution of these
earnings. In addition, because such earnings have been indefinitely reinvested in our foreign operations,
repatriation would require liquidation of those investments or a recapitalization of our foreign subsidiaries, the
impacts and effects of which are not readily determinable.
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