BB&T 2015 Annual Report Download - page 135

TableofContents

  

Beginning balance of unrecognized tax benefits $ 503 $ 644 $ 297
Additions based on tax positions related to current year ― 1 18
Additions (reductions) for tax positions of prior years (76) (34) 343
Settlements (1) (17) ―
Lapse of statute of limitations (1) ― ―
Unrecognized deferred tax benefits from acquisitions 1 (91) (14)
Ending balance of unrecognized tax benefits $ 426 $ 503 $ 644
Unrecognized tax benefits that would have impacted effective rate if recognized
Federal $ 422 $ 497 $ 631
State 3 4 11
The Company had $181 million, $210 million and $213 million in liabilities for tax-related interest and penalties recorded on its Consolidated Balance
Sheets at December 31, 2015, 2014, and 2013, respectively. The amount of net interest and penalties related to unrecognized tax benefits recognized in the
Consolidated Statements of Income was a benefit of $29 million for 2015, an immaterial amount for 2014 and expense of $176 million for 2013.
The IRS has completed its Federal income tax examinations of BB&T through 2010. 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.
During September 2013, the court denied the refund claim. These developments and other smaller matters resulted in $516 million of income tax adjustments
during 2013. BB&T appealed the decision to the U.S. Court of Appeals for the Federal Circuit. During May 2015, the appeals court overturned a portion of
the earlier ruling, resulting in the recognition of a $107 million income tax benefit during the second quarter. The remainder of the decision was affirmed.
During September 2015, BB&T filed a petition requesting the case be heard by the U.S. Supreme Court. A decision to hear the case has not been made at this
time.
It is reasonably possible that the litigation associated with the financing transaction may conclude within the next twelve months; however, it is also possible
that the appeals process could take longer than one year. Changes in the amount of unrecognized tax benefits, penalties and interest could result in a benefit
of up to approximately $596 million.


Defined Benefit Retirement Plans
BB&T provides a defined benefit retirement plan qualified under the IRC that covers most employees. Benefits are based on years of service, age at
retirement and the employee's compensation during the five highest consecutive years of earnings within the last ten years of employment.
In addition, supplemental retirement benefits are provided to certain key officers under supplemental defined benefit executive retirement plans, which are
not qualified under the IRC. Although technically unfunded plans, a Rabbi Trust and insurance policies on the lives of certain of the covered employees are
available to finance future benefits.
The following actuarial assumptions were used to determine net periodic pension costs for the qualified pension plan:

  
Weighted average assumed discount rate 4.27 % 5.10 % 4.25 %
Weighted average expected long-term rate of return on plan assets 7.50 7.75 8.00
Assumed long-term rate of annual compensation increases 4.50 5.00 4.50
122
Source: BB&T CORP, 10-K, February 25, 2016 Powered by Morningstar® Document Research℠
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.