EMC 2004 Annual Report Download - page 35

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Table of Contents
exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not
have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a
result of the exchange. The adoption of FAS No. 153 is not expected to have a material impact on our financial position or results of operations.
In October 2004, the American Jobs Creation Act of 2004 (the "AJCA") was passed. The AJCA provides a deduction for income from qualified domestic
production activities which will be phased in from 2005 through 2010. In return, the AJCA also provides for a two-year phase-out of the existing extra-
territorial income exclusion for foreign sales that was viewed to be inconsistent with international trade protocols by the European Union. In December 2004,
the FASB issued FASB Staff Position ("FSP") No. 109-1, "Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on
Qualified Production Activities by the American Jobs Creation Act of 2004." FSP 109-1 treats the deduction as a "special deduction" as described in
FAS No. 109. As such, the special deduction has no effect on deferred tax assets and liabilities existing at the enactment date. Rather, the impact of this
deduction will be reported in the same period in which the deduction is claimed in our tax return. We are currently evaluating the impact the AJCA will have
on our results of operations and financial position.
The AJCA also creates a temporary incentive for U.S. corporations to repatriate accumulated income earned abroad by providing an 85% dividends
received deduction for certain dividends from controlled foreign corporations. The deduction is subject to a number of limitations. We are currently evaluating
the AJCA and are not yet in a position to decide whether, or to what extent, we might repatriate foreign earnings that have not yet been remitted to the U.S.;
however, upon finalization of our assessment, it is reasonably possible that we will repatriate some amount given that our total unremitted earnings as of
December 31, 2004 was approximately $3,200. The amount of income tax we would incur should we repatriate some level of earnings cannot be reasonably
estimated at this time. We expect to finalize our assessment sometime in 2005.
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