Johnson Controls 2012 Annual Report Download - page 98

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98
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Year Ended
Year Ended
Year Ended
September 30, 2012
September 30, 2011
September 30, 2010
(in millions)
Beginning balance, September 30
$
1,357
$
1,262
$
1,049
Additions for tax positions related to the current year
143
150
253
Additions for tax positions of prior years
36
20
257
Reductions for tax positions of prior years
(58)
(62)
(158)
Settlements
-
(5)
(109)
Statute closings
(13)
(8)
(30)
Ending balance, September 30
$
1,465
$
1,357
$
1,262
In the U.S., the fiscal years 2007 through 2009 are currently under exam by the Internal Revenue Service (IRS) and
fiscal years 2004 through 2006 are currently under IRS Appeals. Additionally, the Company is currently under
exam in the following major foreign jurisdictions:
Tax Jurisdiction
Tax Years Covered
Brazil
2004 – 2008
Canada
2007 – 2010
Czech Republic
2007 – 2009
France
2002 – 2010
Germany
2001 – 2010
Italy
2005 – 2009
Mexico
2003 – 2004
Poland
2008 – 2009
Slovakia
2009 – 2010
The Company expects that certain tax examinations, appellate proceedings and/or tax litigation will conclude within
the next twelve months, the impact of which could be up to a $200 million benefit to tax expense.
As a result of certain recent events related to prior tax planning initiatives, during the third quarter of fiscal 2012, the
Company reduced the reserve for uncertain tax positions by $22 million, including $13 million of interest and
penalties.
Based on published case law in a foreign jurisdiction and the settlement of a tax audit during the third quarter of
fiscal 2010, the Company released net $38 million of reserves for uncertain tax positions, including interest and
penalties.
As a result of certain events related to tax planning initiatives during the first quarter of fiscal 2010, the Company
increased the reserve for uncertain tax positions by $31 million, including $26 million of interest and penalties.
In the fourth quarter of fiscal 2010, the Company decreased its reserves for uncertain tax positions by $20 million,
which was substantially offset by an increase in its valuation allowances in a similar amount. These adjustments
were based on a review of tax filing positions taken in jurisdictions with valuation allowances as indicated above.
Impacts of Tax Legislation and Change in Statutory Tax Rates
The look-through rule, under subpart F of the U.S. Internal Revenue Code, expired for the Company on September
30, 2012. The look-through rule had provided an exception to the U.S. taxation of certain income generated by
foreign subsidiaries. It is generally thought that this rule will be extended with the possibility of retroactive
application.
During the fiscal year ended September 30, 2012, tax legislation was adopted in Japan which reduces its statutory
income tax rate by 5%. Also, tax legislation was adopted in various jurisdictions to limit the annual utilization of tax
losses that are carried forward. None of these changes had a material impact on the Company’s consolidated
financial condition, results of operations or cash flows.