Expedia 2013 Annual Report Download - page 114

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A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
2013 2012 2011
(In thousands)
Balance, beginning of year $102,305 $ 81,682 $68,536
Increases to tax positions related to the current year 21,899 20,453 15,679
Increases to tax positions related to prior years 5,064 4,837 1,047
Decreases to tax positions related to prior years (3,732) (304) (2,142)
Reductions due to lapsed statute of limitations (4,134) (5,061) (3,352)
Settlements during current year (8,957) (607) —
Interest and penalties (2,733) 1,305 1,914
Balance, end of year $109,712 $102,305 $81,682
As of December 31, 2013, we had $110 million of gross unrecognized tax benefits, $85 million of which, if
recognized, would affect the effective tax rate. As of December 31, 2012, we had $102 million of gross
unrecognized tax benefits, $83 million of which, if recognized, would affect the effective tax rate.
We recognize interest and penalties related to unrecognized tax benefits in income tax expense. As of
December 31, 2013 and 2012, total gross interest and penalties accrued was $15 million and $18 million,
respectively. In connection with our unrecognized tax benefits, we recognized interest (benefit) expense in 2013,
2012 and 2011 of $(3) million, $1 million, and $2 million.
The Company is routinely under audit by federal, state, local and foreign income tax authorities. These
audits include questioning the timing and the amount of income and deductions and the allocation of income and
deductions among various tax jurisdictions. The Internal Revenue Service is currently examining Expedia’s U.S.
federal income tax returns for the periods ended December 31, 2009 through December 31, 2010. With few
exceptions, the statute of limitations for periods prior to 2001, and from 2006 to 2008 are closed. The statute of
limitations for periods ending December 31, 2003 through August 8, 2005 has been extended to June 30, 2014.
The Company believes it is reasonably possible its liabilities related to uncertain tax positions could
decrease by approximately $23 million within twelve months of the current reporting date due to settlements,
expirations of statutes of limitations, and the reversal of deductible temporary differences.
NOTE 12 — Redeemable Noncontrolling Interests
We have noncontrolling interests in majority owned entities, which are carried at fair value as the
noncontrolling interests contain certain rights, whereby we may acquire and the minority shareholders may sell to
us the additional shares of the companies. A reconciliation of redeemable noncontrolling interest for the years
ended December 31, 2013, 2012 and 2011 is as follows:
Year ended December 31,
2013 2012 2011
(in thousands)
Balance, beginning of the period $ 13,473 $13,952 $ 29,825
Acquisition of redeemable noncontrolling interest 343,984 — —
Purchase of subsidiary shares at fair value (14,923) — (14,688)
Net income (loss) attributable to noncontrolling
interests (7,130) 485 (256)
Fair value adjustments 26,614 772 (436)
Currency translation adjustments and other 2,853 (1,736) (493)
Balance, end of period $364,871 $13,473 $ 13,952
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