Plantronics 2009 Annual Report Download - page 65

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57
Income Taxes
We are subject to income taxes both in the U.S. as well as in several foreign jurisdictions. We must make certain estimates and
judgments in determining income tax expense for the financial statements. These estimates occur in the calculation of tax benefits and
deductions, tax credits, and tax assets and liabilities which are generated from differences in the timing of when items are recognized
for book purposes and when they are recognized for tax purposes.
On April 1, 2007, we adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB
Statement No. 109” (“FIN 48”), which clarifies the accounting for uncertainty in income tax positions. Under FIN 48, the impact of
an uncertain income tax position on income tax expense must be recognized at the largest amount that is more-likely-than-not to be
sustained. An uncertain income tax position will not be recognized unless it has a greater than 50% likelihood of being sustained.
There were no material adjustments as a result of the adoption of FIN 48. At the adoption date, we had $12.4 million of unrecognized
tax benefits. As of March 31, 2009, we had $11.1 million of unrecognized tax benefits all of which would favorably impact the
effective tax rate in future periods if recognized. We continue to follow the practice of recognizing interest and penalties related to
income tax matters as a part of the provision for income taxes.
We account for income taxes under an asset and liability approach that requires the expected future tax consequences of temporary
differences between book and tax bases of assets and liabilities to be recognized as deferred tax assets and liabilities. Valuation
allowances are established to reduce deferred tax assets when, based on available objective evidence, it is more likely than not that the
benefit of such assets will not be realized.