Avis 2012 Annual Report Download - page 78

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F-22
The following table presents unrecognized tax benefits reflected as of December 31:
As of December 31,
2012
2011
Unrecognized tax benefit in non-current income taxes payable (a)
$
39
$
169
Accrued interest payable on potential tax liabilities (b)
22
21
__________
(a) Pursuant to the agreements governing the Separation entered into in connection with the Separation (as defined below), the
Company is entitled to indemnification for non-Avis Budget Car Rental tax contingencies for taxable periods prior to and
including the Separation. As of December 31, 2012, $15 million of unrecognized tax benefits are non-Avis Budget Car Rental tax
contingencies.
(b) The Company recognizes potential interest related to unrecognized tax benefits within interest expense related to corporate debt,
net on the accompanying Consolidated Statements of Operations. Penalties incurred during the twelve months ended December
31, 2012, 2011 and 2010, were not significant and were recognized as a component of income taxes.
In 2010, the Company reached a settlement with the Internal Revenue Service (“IRS”) with respect to its examination of
the Company’s taxable years 2003 through 2006, the year in which the Company was separated (the “Separation”) into
four independent companies. The Company was entitled to indemnification for most pre-Separation tax matters from the
Company’s former Realogy Corporation (“Realogy”) and Wyndham Worldwide Corporation (“Wyndham”) subsidiaries,
and therefore amounts due to the IRS at the conclusion of the audit did not have a material impact on the Company’s
financial position. The Company made payments to the IRS and state tax authorities of $144 million, including interest,
in conjunction with the conclusion of the audit, all of which were funded by Realogy and Wyndham. The Company was
also reimbursed $89 million by Wyndham for the use of certain of the Company’s tax attributes in connection with the
conclusion of the IRS audit. As a result of the conclusion of the audit, the Company reduced income taxes payable and
related receivables from Realogy and Wyndham by approximately $295 million, which items offset within income from
discontinued operations. In addition, in connection with the conclusion of the IRS audit, a reallocation of certain deferred
taxes with our former subsidiaries resulted in a $16 million decrease to stockholders’ equity.
10. Other Current Assets
Other current assets consisted of:
As of December 31,
2012
2011
Prepaid expenses
$
174
$
179
Sales and use tax
108
92
Other
123
109
$
405
$
380
11. Property and Equipment, net
Property and equipment, net consisted of:
As of December 31,
2012
2011
Land
$
58
$
58
Buildings and leasehold improvements
521
492
Capitalized software
419
400
Furniture, fixtures and equipment
319
259
Buses and support vehicles
64
54
Projects in process
37
37
1,418
1,300
Less: Accumulated depreciation and amortization
(889)
(807)
$
529
$
493
Depreciation and amortization expense relating to property and equipment during 2012, 2011 and 2010 was $104
million, $88 million and $87 million, respectively (including $30 million, $26 million and $28 million, respectively, of
amortization expense relating to capitalized computer software).