3M 2012 Annual Report Download - page 79
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taxes. The net UTB is included as components of Other Current Assets, Other Assets, Accrued Income Taxes, and Other
Liabilities within the Consolidated Balance Sheet.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense. The
Company recognized in the consolidated statement of income on a gross basis approximately $12 million, $1 million, and
$9 million of benefit in 2012, 2011, and 2010, respectively. At December 31, 2012 and December 31, 2011, accrued
interest and penalties in the consolidated balance sheet on a gross basis were $44 million and $56 million, respectively.
Included in these interest and penalty amounts are interest and penalties related to tax positions for which the ultimate
deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact
of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not
affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.
As a result of certain employment commitments and capital investments made by 3M, income from manufacturing
activities in China, Taiwan, Korea, Brazil, and Singapore is subject to reduced tax rates or, in some cases, is exempt from
tax for years through 2013, 2016, 2018, 2023, and 2023, respectively. The income tax benefits attributable to the tax
status of these subsidiaries are estimated to be $64 million (9 cents per diluted share) in 2012, $77 million (11 cents per
diluted share) in 2011, and $69 million (10 cents per diluted share) in 2010.
The Company has not provided deferred taxes on unremitted earnings attributable to international companies that have
been considered to be reinvested indefinitely. These earnings relate to ongoing operations and were approximately $8.6
billion as of December 31, 2012. Because of the availability of U.S. foreign tax credits, it is not practicable to determine
the income tax liability that would be payable if such earnings were not indefinitely reinvested.