Johnson Controls 2013 Annual Report Download - page 101

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101
In the U.S., fiscal years 2010 through 2012 are currently under exam by the Internal Revenue Service (IRS) and 2004 through
2009 are currently under (IRS) appeals. Additionally, the Company is currently under exam in the following major foreign
jurisdictions:
Tax Jurisdiction Tax Years Covered
Belgium 2011 - 2012
Brazil 2004 - 2008
Canada 2007 - 2010
France 2002 - 2012
Germany 2001 - 2010
Italy 2005 - 2009
Japan 2010 - 2012
Korea 2008 - 2012
Mexico 2003 - 2004, 2008 - 2011
Poland 2008 - 2009
The Company expects that certain tax examinations, appellate proceedings and/or tax litigation will conclude within the next
twelve months, the impact of which is not expected to be significant to the Company's consolidated financial statements.
In the third quarter of fiscal 2013, tax audit resolutions resulted in a net $79 million benefit to income tax expense.
As a result of foreign law changes during the second quarter of fiscal 2013, the Company increased its total reserve for uncertain
tax positions, resulting in income tax expense of $17 million.
As a result of certain 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, resulting in a benefit to
income tax expense.
Other Tax Matters
In the fourth quarter of fiscal 2013, the Company disposed of assets, the HomeLink® product line and certain businesses, which
resulted in $59 million of incremental tax expense above the statutory rate on the net gain.
In the fourth quarter of fiscal 2013, the Company provided income tax expense on the foreign undistributed earnings of the non-
U.S. subsidiaries primarily related to the Electronics business, which resulted in $210 million of incremental tax expense.
During fiscal 2013, the Company incurred significant charges for restructuring and impairment costs. A substantial portion of these
charges cannot be benefited for tax purposes due to the Company's current tax position in these jurisdictions and the underlying
tax basis in the impaired assets, thus causing a $235 million incremental tax expense.
In the third quarter of fiscal 2013, the Company resolved certain Mexican tax issues, which resulted in a $61 million benefit to
income tax expense.
Impacts of Tax Legislation and Change in Statutory Tax Rates
As a result of foreign law changes during the second quarter of fiscal 2013, the Company increased its total reserve for uncertain
tax positions, resulting in income tax expense of $17 million.
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. The
rule was extended in January 2013 retroactive to the beginning of the Company's 2013 fiscal year.
During the fiscal year ended September 30, 2012, tax legislation was adopted in Japan which reduced 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.