Visa 2009 Annual Report Download - page 115

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2009
(in millions, except as noted)
conditional upon certain employment and investment thresholds being met by the Company. The tax incentive agreement decreased Singapore tax by $16
million for fiscal 2009. The benefit of the tax incentive agreement on diluted net income per share was $0.02.
In accordance with ASC 740, the Company is required 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.
At September 30, 2009 and 2008, the Company's total unrecognized tax benefits were approximately $439 million and $407 million, respectively,
exclusive of interest and penalties described below. Included in the $439 million and $407 million are approximately $397 million and $334 million of
unrecognized tax benefits, respectively, that if recognized, would reduce the effective tax rate in a future period.
A reconciliation of beginning and ending unrecognized tax benefits by fiscal year is as follows:
2009 2008
Beginning balance at October 1 (in millions) $ 407 $ 320
Increases of unrecognized tax benefits related to prior years 14 8
Increases of unrecognized tax benefits related to current year 23 126
Decreases of unrecognized tax benefits related to settlements (4) (46)
Reductions to unrecognized tax benefits related to lapsing statute of limitations (1) (1)
Ending balance at September 30 $ 439 $ 407
It is the Company's policy to account for interest expense and penalties related to uncertain tax positions as interest expense and administrative and
other, respectively, in its consolidated statements of operations. In fiscal 2009 and 2008, the Company recognized $17 million and $2 million of interest
expense, respectively, and $4 million and a de minimus amount of penalties, respectively, related to uncertain tax positions in its statements of operations. At
September 30, 2009, the Company had cumulatively $22 million and $5 million accrued interest and penalties, respectively, related to uncertain tax positions
in its other long term liabilities.
The Company believes that unrecognized tax benefits will not significantly increase or decrease within the next 12 months.
The Company's fiscal 2006, 2007 and 2008 U.S. federal income tax returns are currently under examination by the Internal Revenue Service. The
Company is also subject to examinations by various state and foreign tax authorities. The Company has concluded all California income tax matters for years
through fiscal 2003. All material state and foreign tax matters have been concluded for years through fiscal 2002.
Note 21—Legal Matters
The Company is party to various legal and regulatory proceedings. Some of these proceedings involve complex claims that are subject to substantial
uncertainties and unascertainable damages.
114