Visa 2008 Annual Report Download - page 176

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2008
(in millions, except as noted)
tax apportionment. In addition, the change in state tax apportionment resulted in a $115 million one-time tax benefit due to the remeasurement of the
Company's deferred taxes.
Income taxes receivable of $90 million are included in prepaid and other current assets at September 30, 2008. See Note 7—Prepaid Expenses and
Other Assets. Accrued income taxes of $122 million are included in other long-term liabilities at September 30, 2008 and income taxes payable of $147
million are included in accrued taxes as part of accrued liabilities at September 30, 2007. See Note 10—Accrued and Other Liabilities.
Cumulative undistributed earnings of the Company's international subsidiaries amounted to $53 million at September 30, 2008, all of which are
intended to be reinvested indefinitely. The amount of income taxes that would have resulted had such earnings been repatriated is estimated to be $18 million.
FIN 48
On October 1, 2007, the Company adopted FASB Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income Taxes, an interpretation of
FASB Statement No. 109. FIN 48 clarifies the accounting and reporting for income taxes where interpretation of the tax law may be uncertain. FIN 48
prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of income tax uncertainties with respect
to positions taken or expected to be taken in income tax returns. The adoption of FIN 48 required the Company to inventory, evaluate, and measure all
uncertain tax positions taken or to be taken on tax returns, and to record liabilities for the amount of such positions that may not be sustained, or may only
partially be sustained, upon examination by the relevant taxing authorities. The initial adoption of FIN 48 resulted in a decrease in accumulated deficit of
approximately $8 million and a decrease in goodwill of approximately $6 million at October 1, 2007.
At September 30, 2008, the Company's total unrecognized tax benefits were approximately $407 million, exclusive of interest and penalties described
below. Included in the $407 million are approximately $334 million of unrecognized tax benefits that, if recognized, would reduce the effective tax rate in a
future period.
A reconciliation of the October 1, 2007 through September 30, 2008 amount of unrecognized tax benefits is as follows:
Beginning balance at October 1, 2007 (in millions) $ 320
Increases of unrecognized tax benefits related to prior years 8
Increases of unrecognized tax benefits related to current year 126
Decreases of unrecognized tax benefits related to settlements (46)
Reductions to unrecognized tax benefits related to lapsing statute of limitations (1)
Ending balance at September 30, 2008 $ 407
In connection with the adoption of FIN 48, the Company elected to change its classification policy for interest expense and penalties related to
uncertain tax positions. At October 1, 2007, the Company began to account for interest expense and penalties related to uncertain tax positions as interest
expense and penalties in its consolidated statement of operations. In fiscal 2008, the Company
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