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2013 Annual Report 60
Baker Hughes Incorporated
Notes to Consolidated Financial Statements
respectively. If we were to prevail on all uncertain tax positions, the net effect would be a decrease to our income
tax provision of approximately $244 million. The remaining approximately $38 million is offset by deferred tax
assets that represent tax benefits that would be received in different taxing jurisdictions in the event that we did not
prevail on all uncertain tax positions.
The following table presents the changes in our gross unrecognized tax benefits and associated interest and
penalties included in the consolidated balance sheets.
Gross Unrecognized
Tax
Benefits, Excluding
Interest and Penalties
Interest and
Penalties
Total Gross
Unrecognized Tax
Benefits
Balance at December 31, 2010 $ 324 $ 114 $ 438
(Decrease) increase in prior year tax positions (5) 12 7
Increase in current year tax positions 8 11 19
Decrease related to settlements with taxing authorities (3) (1) (4)
Decrease related to lapse of statute of limitations (38) (38) (76)
Decrease due to effects of foreign currency translation (3) (2) (5)
Balance at December 31, 2011 283 96 379
Decrease in prior year tax positions (18) (5) (23)
Increase in current year tax positions 6 1 7
Decrease related to settlements with taxing authorities (34) (9) (43)
Decrease related to lapse of statute of limitations (38) (9) (47)
Decrease due to effects of foreign currency translation (3) (3) (6)
Balance at December 31, 2012 196 71 267
Increase (decrease) in prior year tax positions 20 (2) 18
Increase in current year tax positions 44 1 45
Decrease related to settlements with taxing authorities (15) (4) (19)
Decrease related to lapse of statute of limitations (17) (10) (27)
Decrease due to effects of foreign currency translation — (2) (2)
Balance at December 31, 2013 $ 228 $ 54 $ 282
It is expected that the amount of unrecognized tax benefits will change in the next twelve months due to
expiring statutes, audit activity, tax payments, competent authority proceedings related to transfer pricing, or final
decisions in matters that are the subject of litigation in various taxing jurisdictions in which we operate. At
December 31, 2013, we had approximately $99 million of tax liabilities, net of $20 million of tax assets, related to
uncertain tax positions, each of which are individually insignificant, and each of which are reasonably possible of
being settled within the next twelve months.
At December 31, 2013, approximately $163 million of tax liabilities for total gross unrecognized tax benefits
were included in the noncurrent portion of our income tax liabilities, for which the settlement period cannot be
determined; however, it is not expected to be within the next twelve months.
We operate in more than 80 countries and are subject to income taxes in most taxing jurisdictions in which we
operate. The following table summarizes the earliest tax years that remain subject to examination by the major
taxing jurisdictions in which we operate. These jurisdictions are those we project to have the highest tax liability for
2014.
Jurisdiction Earliest Open Tax Period Jurisdiction Earliest Open Tax Period
Canada 2005 Norway 1999
Germany 2008 Saudi Arabia 2003
Netherlands 2008 U.S. 2010