Valero 2015 Annual Report Download - page 112
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Table of Contents
VALERO ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Should we ultimately recognize tax benefits related to the valuation allowance for deferred income tax assets as of December 31, 2015,
such amounts will be allocated as follows (in millions):
Income tax benefit $ 429
Additional paid-in capital 6
Total $ 435
Deferred income taxes have not been provided on the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and the respective tax bases of our international subsidiaries based on the
determination that such differences are essentially permanent in duration in that the earnings of these subsidiaries are expected to be
indefinitely reinvested in the international operations. As of December 31, 2015, the cumulative undistributed earnings of these
subsidiaries were approximately $3.2 billion. If those earnings were not considered indefinitely reinvested, deferred income taxes
would have been recorded after consideration of U.S. foreign tax credits. It is not practicable to estimate the amount of additional tax
that might be payable on those earnings, if distributed.
The following is a reconciliation of the change in unrecognized tax benefits, excluding related penalties, interest (net of the U.S. federal
and state income tax effects), and the U.S. federal income tax effect of state unrecognized tax benefits (in millions):
Year Ended December 31,
2015
2014
2013
Balance as of beginning of year $ 989
$ 950
$ 341
Additions based on tax positions related to the current year 36
35
64
Additions for tax positions related to prior years 83
118
576
Reductions for tax positions related to prior years (82)
(67)
(26)
Reductions for tax positions related to the lapse of
applicable statute of limitations (3)
(1)
(4)
Settlements (59)
(46)
(1)
Balance as of end of year $ 964
$ 989
$ 950
As of December 31, 2015, the balance in unrecognized tax benefits includes $570 million of tax refunds that we intend to claim by
amending various of our income tax returns for 2005 through 2015. We intend to propose that incentive payments received from the
U.S. federal government for blending biofuels into refined products be excluded from taxable income during these periods. However,
due to the complexity of this matter and uncertainties with respect to the interpretation of the Internal Revenue Code, we concluded that
the refund claims included in the reconciliation below cannot be recognized in our financial statements. As a result, these amounts are
not included in our uncertain tax position liabilities as of December 31, 2015, 2014, and 2013 even though they are reflected in the
table above.
106