Chevron 2011 Annual Report Download - page 55

Chevron Corporation 2011 Annual Report 53
Uncertain Income Tax Positions Under accounting standards
for uncertainty in income taxes (ASC 740-10), a company
recognizes a tax benet in the nancial statements for an
uncertain tax position only if management’s assessment is
that the position is “more likely than not” (i.e., a likelihood
greater than 50 percent) to be allowed by the tax jurisdiction
based solely on the technical merits of the position. e term
“tax position” in the accounting standards for income taxes
refers to a position in a previously led tax return or a posi-
tion expected to be taken in a future tax return that is
reected in measuring current or deferred income tax assets
and liabilities for interim or annual periods.
e following table indicates the changes to the compa-
ny’s unrecognized tax benets for the years ended December
31, 2011, 2010 and 2009. e term “unrecognized tax ben-
ets” in the accounting standards for income taxes refers to
the dierences between a tax position taken or expected to be
taken in a tax return and the benet measured and recognized
in the nancial statements. Interest and penalties are not
included.
2011 2010 2009
Balance at January 1 $ 3,507 $ 3,195 $ 2,696
Foreign currency eects (2) 17 (1)
Additions based on tax positions
taken in current year 469 334 459
Reductions based on tax positions
taken in current year – – –
Additions/reductions resulting from
current-year asset acquisitions/sales (41) – –
Additions for tax positions taken
in prior years 236 270 533
Reductions for tax positions taken
in prior years (366) (165) (182)
Settlements with taxing authorities
in current year (318) (136) (300)
Reductions as a result of a lapse
of the applicable statute of limitations (4) (8) (10)
Balance at December 31 $ 3,481 $ 3,507 $ 3,195
Approximately 80 percent of the $3,481 of unrecog-
nized tax benets at December 31, 2011, would have an
impact on the eective tax rate if subsequently recognized.
Certain of these unrecognized tax benets relate to tax
carryforwards that may require a full valuation allowance
atthe time of any such recognition.
Tax positions for Chevron and its subsidiaries and
aliates are subject to income tax audits by many tax juris-
dictions throughout the world. For the company’s major tax
jurisdictions, examinations of tax returns for certain prior tax years
had not been completed as of December 31, 2011. For these
jurisdictions, the latest years for which income tax examinations
had been nalized were as follows: United States – 2007,
Nigeria – 2000, Angola – 2001, Saudi Arabia – 2003 and
Kazakhstan – 2005.
e company engages in ongoing discussions with tax
authorities regarding the resolution of tax matters in the various
jurisdictions. Both the outcome of these tax matters and the
timing of resolution and/or closure of the tax audits are highly
uncertain. However, it is reasonably possible that developments
on tax matters in certain tax jurisdictions may result in signi-
cant increases or decreases in the company’s total unrecognized
tax benets within the next 12 months. Given the number of
years that still remain subject to examination and the number
of matters being examined in the various tax jurisdictions, the
company is unable to estimate the range of possible adjust-
ments to the balance of unrecognized tax benets.
On the Consolidated Statement of Income, the company
reports interest and penalties related to liabilities for uncertain
tax positions as “Income tax expense.” As of December 31,
2011, accruals of $118 for anticipated interest and penalty
obligations were included on the Consolidated Balance Sheet,
compared with accruals of $225 as of year-end 2010. Income
tax expense (benet) associated with interest and penalties was
$(64), $40 and $(20) in 2011, 2010 and 2009, respectively.
Taxes Other an on Income
Year ended December 31
2011 2010 2009
United States
Excise and similar taxes on
products and merchandise $ 4,199 $ 4,484 $ 4,573
Import duties and other levies 4 – (4)
Property and other
miscellaneous taxes 726 567 584
Payroll taxes 236 219 223
Taxes on production 308 271 135
Total United States 5,473 5,541 5,511
International
Excise and similar taxes on
products and merchandise 3,886 4,107 3,536
Import duties and other levies 3,511 6,183 6,550
Property and other
miscellaneous taxes 2,354 2,000 1,740
Payroll taxes 148 133 134
Taxes on production 256 227 120
Total International 10,155 12,650 12,080
Total taxes other than on income $ 15,628 $ 18,191 $ 17,591
Note 15 Taxes – Continued