E-Z-GO 2014 Annual Report Download - page 75

Our future results may include favorable or unfavorable adjustments to our estimated tax liabilities due to settlement of income tax
examinations, new regulatory or judicial pronouncements, expiration of statutes of limitations or other relevant events. As a result,
our effective tax rate may fluctuate significantly on a quarterly and annual basis.
Our unrecognized tax benefits represent tax positions for which reserves have been established. Unrecognized state tax benefits
and interest related to unrecognized tax benefits are reflected net of applicable tax benefits. A reconciliation of our unrecognized
tax benefits, excluding accrued interest, is as follows:
(In millions)
January 3,
2015
December 28,
2013
December 29,
2012
Balance at beginning of year
$ 284
$ 290
$ 294
Additions for tax positions related to current year
10
15
5
Additions for current year acquisitions
100
—
—
Additions for tax positions of prior years
—
1
2
Reductions for tax positions of prior years
(6)
(17)
(3)
Reductions for expiration of statute of limitations and settlements
(3)
(5)
(8)
Balance at end of year
$ 385
$ 284
$ 290
At January 3, 2015 and December 28, 2013, approximately $305 million and $204 million, respectively, of these unrecognized tax
benefits, if recognized, would favorably affect our effective tax rate in a future period. At January 3, 2015 and December 28,
2013, the remaining $80 million in unrecognized tax benefits were related to discontinued operations.
It is reasonably possible that within the next 12 months our unrecognized tax benefits, exclusive of interest, may decrease in the
range of approximately $0 to $215 million, as a result of the conclusion of audits and any related appeals or review processes, the
expiration of statutes of limitations and additional worldwide uncertain tax positions. This potential decrease primarily relates to
uncertainties with respect to prior dispositions and research tax credits. However, based on the process of finalizing audits and any
required review process by relevant authorities, it is difficult to estimate the timing and amount of potential changes to our
unrecognized tax benefits. Although the outcome of these matters cannot be determined, we believe adequate provision has been
made for any potential unfavorable financial statement impact.
In the normal course of business, we are subject to examination by taxing authorities throughout the world, including major
jurisdictions such as Canada, China, Germany, Japan, Mexico and the U.S. With few exceptions, we no longer are subject to U.S.
federal, state and local income tax examinations for years before 1997. We are no longer subject to non-U.S. income tax
examinations in our major jurisdictions for years before 2009.
During 2014, 2013 and 2012, we recognized net tax-related interest expense totaling approximately $6 million, $6 million and $9
million, respectively, in the Consolidated Statements of Operations. At January 3, 2015 and December 28, 2013, we had a total of
$132 million and $126 million, respectively, of net accrued interest expense included in our Consolidated Balance Sheets.
69 Textron Inc. Annual Report • 2014