Johnson Controls 2015 Annual Report Download - page 104

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During fiscal 2015, the Company settled a significant number of tax examinations in Germany, Mexico and the U.S., impacting
fiscal years 1998 to fiscal 2012. The settlement of unrecognized tax benefits included cash payments for approximately $440
million and the loss of various tax attributes. The reduction for tax positions of prior years is substantially related to foreign
exchange rates. In the fourth quarter of fiscal 2015, income tax audit resolutions resulted in a net $99 million benefit to income
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.
In the U.S., it is expected that fiscal years 2013 through 2014 will be examined by the Internal Revenue Service during 2016.
Additionally, the Company is currently under exam in the following major foreign jurisdictions:
Tax Jurisdiction Tax Years Covered
Belgium 2012 - 2014
Brazil 2004 - 2008, 2011 - 2012
Canada 2008 - 2013
France 2002 - 2013
Germany 2007 - 2012
Italy 2005 - 2009, 2011
Korea 2008 - 2012
Mexico 2010 - 2013
United Kingdom 2011 - 2013
Other Tax Matters
During fiscal 2015, 2014 and 2013, 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 the Company's current tax position
in these jurisdictions and the underlying tax basis in the impaired assets, resulting in $52 million, $75 million and $238 million
incremental tax expense in fiscal 2015, 2014 and 2013, respectively.
In the fourth quarter of fiscal 2015, the Company completed its global automotive interiors joint venture with Yanfeng Automotive
Trim Systems. Refer to Note 2, "Acquisitions and Divestitures," of the notes to consolidated financial statements for additional
information. In connection with the divestiture of the Interiors business, the Company recorded a pre-tax gain on divestiture of
$145 million, $38 million net of tax. The tax impact of the gain is due to the jurisdictional mix of gains and losses on the divestiture,
which resulted in non-benefited expenses in certain countries and taxable gains in other countries. In addition, in the third and
fourth quarters of fiscal 2015, the Company provided income tax expense for repatriation of cash and other tax reserves associated
with the Automotive Experience Interiors joint venture transaction, which resulted in a tax charge of $75 million and $223 million,
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 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.