Coca Cola 2008 Annual Report Download - page 130

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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17: INCOME TAXES (Continued)
A reconciliation of the changes in the gross balance of unrecognized tax benefits amounts is as follows (in
millions):
Year Ended December 31, 2008 2007
Beginning balance of unrecognized tax benefits $ 643 $ 511
Increases related to prior period tax positions 52 22
Decreases related to prior period tax positions (4) —
Increases due to current period tax positions 47 51
Decreases related to settlements with taxing authorities (254) (4)
Reductions as a result of a lapse of the applicable statute of limitations (36) (1)
Increases (decreases) from effects of exchange rates (79) 64
Ending balance of unrecognized tax benefits $ 369 $ 643
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax
expense. As of December 31, 2008, the Company had approximately $110 million in interest and penalties
related to unrecognized tax benefits accrued, of which approximately $14 million of benefit was recognized
through tax expense in 2008. If the Company were to prevail on all uncertain tax positions, the reversal of this
accrual would also be a benefit to the Company’s effective tax rate.
As of December 31, 2007, the Company had approximately $272 million in interest and penalties related to
unrecognized tax benefits accrued, of which approximately $82 million was recognized through tax expense in
2007.
It is expected that the amount of unrecognized tax benefits will change in the next twelve months; however,
we do not expect the change to have a significant impact on our consolidated statement of income or
consolidated balance sheet. These changes may be the result of settlement of ongoing audits, statute of
limitations expiring, or final settlements in transfer pricing matters that are the subject of litigation. At this time,
an estimate of the range of the reasonably possible outcomes cannot be made.
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