BB&T 2012 Annual Report Download - page 138
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116
Years Ended December 31,
2012 2011 2010
(Dollars in millions)
Beginning balance of unrecognized tax benefits $ 301 $ 292 $ 179
Additions based on tax positions related to current year 14 ― ―
Additions for tax positions of prior years ― 6 ―
Settlements (5) (1) ―
Lapse of statute of limitations ― ― (1)
Unrecognized deferred tax benefits from business acquisitions (13) 4 114
Ending balance of unrecognized tax benefits $ 297 $ 301 $ 292
As of December 31, 2012, BB&T had $297 million of unrecognized Federal and state tax benefits that would have impacted
the effective tax rate if recognized. In addition, the Company had $37 million and $39 million in liabilities for tax-related
interest recorded on its Consolidated Balance Sheets at December 31, 2012 and 2011, respectively. Total interest, net of the
Federal benefit, related to unrecognized tax benefits recognized in the 2012, 2011 and 2010 Consolidated Statements of
Income was immaterial. BB&T classifies interest and penalties related to income taxes as a component of the provision for
income taxes in the Consolidated Statements of Income.
The IRS has completed its Federal income tax examinations of BB&T through 2007. Various years remain subject to
examination by state taxing authorities. In February 2010, BB&T received an IRS statutory notice of deficiency for tax years
2002-2007 asserting a liability for taxes, penalties and interest of approximately $892 million related to the disallowance of
foreign tax credits and other deductions claimed by a subsidiary in connection with a financing transaction. BB&T paid the
disputed tax, penalties and interest in March 2010 and filed a lawsuit seeking a refund in the U.S. Court of Federal Claims.
The Court has scheduled the trial to begin March 4, 2013. BB&T recorded a receivable in other assets for the amount of this
payment, less the reserve considered necessary in accordance with applicable income tax accounting guidance. On February
11, 2013, the U.S. Tax Court issued an adverse opinion in a case between the Bank of New York Mellon Corporation and the
IRS involving a transaction with a structure similar to BB&T’ s financing transaction. BB&T has confidence in its position
because, among other reasons, BB&T will raise arguments and issues in its case that were not considered by the Tax Court.
Bank of New York Mellon has indicated it intends to appeal the decision. Nonetheless, BB&T recognized a charge of
approximately $281 million in the first quarter of 2013 as a result of its consideration of this adverse decision. As litigation
progresses, it is reasonably possible changes in the reserve for uncertain tax positions could range from a decrease of $496
million to an increase of $328 million within the next 12 months.