Visa 2008 Annual Report Download - page 91

Table of Contents
Critical Estimates Assumptions and Judgment
Impact if Actual Results
Differ from Assumptions
estimable. Our judgments are subjective based on the status of the legal
or regulatory proceedings, the merits of our defenses and consultation
with in-house and outside legal counsel. In determining our liability
under SFAS 5 for covered litigation under the Retrospective
Responsibility Plan, we also evaluate the actions taken by the litigation
committee including its decisions regarding the establishment and
funding of the escrow account. As additional information becomes
available, we reassess the potential liability related to pending claims
and litigation and may revise our estimates.
Income Taxes
In calculating our
effective tax rate, we
make judgments
regarding certain tax
positions, including the
timing and amount of
deductions and
allocations of income
among various tax
jurisdictions.
We have various tax filing positions with regard to the timing and
amount of deductions and credits, the establishment of reserves for audit
matters and the allocation of income among various tax jurisdictions.
The adoption of FASB interpretation No. 48, "Accounting for
Uncertainty in Income Taxes—an interpretation of FASB Statement No.
109" required us 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.
Although we believe that our estimates and judgments are
reasonable, actual results may differ from these estimates.
Some or all of these judgments are subject to review by
the taxing authorities, including our current and deferred
tax benefits of $317 million and $857 million,
respectively, associated with the settlement of the
American Express litigation and the recognition of a
liability under the guidelines of SFAS No. 5 related to the
Discover litigation and other matters. See Note 23—Legal
Matters to our consolidated financial statements included
elsewhere in this report. If one or more of the taxing
authorities were to successfully challenge our right to
realize some or all of the tax benefit we have recorded,
and we were unable to realize this benefit, it could have a
material and adverse effect on our financial results and
cash flows.
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