Johnson Controls 2014 Annual Report Download - page 105

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105
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 2012
Brazil 2004 - 2008
Canada 2007 - 2012
France 2002 - 2013
Germany 2001 - 2012
Italy 2005 - 2009, 2011
Korea 2008 - 2012
Mexico 2003 - 2004, 2007 - 2013
Poland 2012 - 2013
United Kingdom 2011 - 2012
It is reasonably possible 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 $50 million benefit to tax expense.
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
During fiscal 2014, 2013 and 2012, the Company incurred significant charges for restructuring and impairment costs. Refer to
Note 16, "Significant Restructuring and Impairment Costs," of the notes to consolidated financial statements for additional
information. A substantial portion of these charges cannot be benefited for tax purposes due to our current tax position in these
jurisdictions and the underlying tax basis in the impaired assets, thus causing $75 million, $229 million and $78 million incremental
tax expense in fiscal 2014, 2013 and 2012, respectively.
During the fourth quarter of fiscal 2014, the Company recorded a discrete tax benefit of $51 million due to change in entity status.
In the fourth quarter of fiscal 2014, the Company provided income tax expense on the foreign undistributed earnings of the non-
U.S. subsidiaries related to the Global Workplace Solutions business, which resulted in $35 million of tax expense.
In the third quarter of fiscal 2014, the Company disposed of its Automotive Experience Interiors headliner and sun visor product
lines. Refer to Note 2, "Acquisitions and Divestitures," of the notes to consolidated financial statements for additional information.
As a result, the Company recorded a pre-tax loss on divestiture of $95 million and income tax expense of $38 million. The income
tax expense is due to the jurisdictional mix of gains and losses on the sale, which resulted in non-benefited losses in certain countries
and taxable gains in other countries.
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
The "look-through rule," under subpart F of the U.S. Internal Revenue Code, expired for the Company on September 30, 2014.
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. The "look-through rule" previously