Starwood 2009 Annual Report Download - page 152

benefits of $3 million, $10 million and $3 million, for the years ended December 31, 2009, 2008, and 2007,
respectively, to establish the deferred tax assets on these types of dispositions.
In 2007, the Company recognized a net $97 million tax charge as an adjustment to a tax benefit accrued in 2006
related to a disposition transaction.
During 2008 and 2007, the Company completed certain transactions that generated capital gains for U.S. tax
purposes. These gains were offset by capital losses generated in 2006. As discussed above, the Company had not
previously accrued a benefit for the capital loss since the realization was determined to be unlikely. Therefore,
during 2008 and 2007, the Company recorded tax benefits of $31 million and $158 million, respectively, to reverse
the capital loss valuation allowance.
As a result of the implementation of FIN 48 in 2007, the Company recognized a $35 million cumulative effect
adjustment to the beginning balance of retained earnings in the period. As of December 31, 2009, the Company had
approximately $999 million of total unrecognized tax benefits, of which $73 million would affect its effective tax
rate if recognized. As discussed above, the Company expects to resolve the tax litigation related to the ITT World
Directories transaction during 2010 and expects to reduce that amount of unrecognized tax benefits by approx-
imately $499 million. It is reasonably possible that zero to substantially all of the Company’s other remaining
unrecognized tax benefits will reverse within the next twelve months. A reconciliation of the beginning and ending
balance of unrecognized tax benefits is as follows (in millions):
Balance at January 1, 2008................................................. $ 968
Additions based on tax positions related to the current year ....................... 41
Additions for tax positions of prior years .................................... 2
Settlements with tax authorities . . ......................................... (3)
Reductions for tax positions of prior years ................................... (4)
Reductions due to the lapse of applicable statutes of limitation .................... (1)
Balance at December 31, 2008 .............................................. $1,003
Balance at January 1, 2009................................................. $1,003
Additions based on tax positions related to the current year ....................... 4
Additions for tax positions of prior years .................................... 2
Settlements with tax authorities . . ......................................... (7)
Reductions for tax positions of prior years ................................... (1)
Reductions due to the lapse of applicable statutes of limitation .................... (2)
Balance at December 31, 2009 .............................................. $ 999
F-29
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)