American Express 2015 Annual Report Download - page 161
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The following table presents changes in unrecognized tax benefits:
(Millions) 2015 2014 2013
Balance, January 1 ............................................................... $ 909 $1,044 $1,230
Increases:
Current year tax positions ....................................................... 81 4 124
Tax positions related to prior years ............................................... 177 111 176
Decreases:
Tax positions related to prior years ............................................... (256) (181) (371)
Settlements with tax authorities .................................................. (15) (67) (94)
Lapse of statute of limitations .................................................... (26) (1) (21)
Effects of foreign currency translations ........................................... —(1) —
Balance, December 31 ............................................................ $ 870 $ 909 $1,044
Included in the unrecognized tax benefits of $0.9 billion, $0.9 billion and $1.0 billion for December 31, 2015, 2014
and 2013 are approximately $502 million, $412 million and $427 million, respectively that, if recognized, would
favorably affect the effective tax rate in a future period.
The Company believes it is reasonably possible that its unrecognized tax benefits could decrease within the next
12 months by as much as $231 million principally as a result of potential resolutions of prior years’ tax items with
various taxing authorities. The prior years’ tax items include unrecognized tax benefits relating to the deductibility of
certain expenses or losses and the attribution of taxable income to a particular jurisdiction or jurisdictions. Of the $231
million of unrecognized tax benefits, approximately $21 million relates to amounts that, if recognized, would be
recorded in shareholders’ equity and would not impact the Company’s results of operations or its effective tax rate.
Interest and penalties relating to unrecognized tax benefits are reported in the income tax provision. For the year
ended December 31, 2015, the Company recognized approximately $38 million in expenses for interest and penalties.
For the years ended December 31, 2014 and 2013, the Company recognized benefits of approximately, $19 million and
$31 million, respectively, of interest and penalties. The Company has approximately $164 million and $126 million
accrued for the payment of interest and penalties as of December 31, 2015 and 2014, respectively.
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