General Motors 2013 Annual Report Download - page 113

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Uncertain Tax Positions
The following table summarizes activity of the total amounts of unrecognized tax benefits (dollars in millions):
Years Ended December 31,
2013 2012 2011
Beginning balance ................................................................ $ 2,745 $ 2,370 $ 5,169
Additions to current year tax positions ................................................ 251 112 129
Additions to prior years’ tax positions ................................................. 276 512 562
Reductions to prior years’ tax positions ............................................... (535) (141) (1,002)
Reductions in tax positions due to lapse of statutory limitations ............................ (73) (34) (64)
Settlements ...................................................................... (132) (112) (2,399)
Other .......................................................................... (2) 38 (25)
Ending balance ................................................................... $ 2,530 $ 2,745 $ 2,370
At December 31, 2013 and 2012 there are $1.5 billion and $1.2 billion of unrecognized tax benefits that if recognized would
favorably affect our effective tax rate in the future. In the years ended December 31, 2013, 2012 and 2011 we recorded income tax
related interest expense (benefit) and penalties of $(25) million, $44 million and $(145) million. The interest and penalty benefit in the
year ended December 31, 2011 was due primarily to remeasurements, settlements and statute expirations. At December 31, 2013 and
2012 we had liabilities of $286 million and $222 million for income tax related interest and penalties.
In November 2013 we remeasured a previously disclosed uncertain tax position and recorded a $473 million tax benefit that
increased net operating loss carryforwards, reducing future taxable income.
In the year ended December 31, 2011 certain issues were resolved relating to uncertain tax positions in jurisdictions which had full
valuation allowances. The resolution of these matters resulted in a $2.7 billion reduction to gross uncertain positions. No tax benefit
was recognized with respect to these reductions because the entities were in full valuation allowance jurisdictions or the amounts were
reserved in a prior period.
At December 31, 2013 it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits
in the next twelve months.
Other Matters
Income tax returns are filed in multiple jurisdictions and are subject to examination by taxing authorities throughout the world. We
have open tax years from 2005 to 2013 with various significant tax jurisdictions. These open years contain matters that could be
subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, character, timing or inclusion of
revenue and expenses or the sustainability of income tax credits for a given audit cycle. Given the global nature of our operations
there is a risk that transfer pricing disputes may arise.
We have net operating loss carryforwards in Germany through November 30, 2009 that, as a result of reorganizations that took
place in 2008 and 2009, were not recorded as deferred tax assets. Depending on the outcome of European court decisions these loss
carryforwards may be available to reduce future taxable income in Germany.
In June 2011 we settled a Brazilian income tax matter for $241 million that was reserved and disclosed in a prior period.
In the U.S. we have continuing responsibility for Old GM’s open tax years. Old GM was liquidated on December 15, 2011. The
Internal Revenue Service has audited the returns through the liquidation date and, in January 2014, the audit of these returns was
closed. The reduction to the amount of unrecognized tax benefits is not expected to be significant. In January 2013 the U.S. Congress
enacted federal income tax legislation including an extension of the research credit for tax years 2012 and 2013. As a result, in the
year ended December 31, 2013 we recorded an income tax benefit related to the 2012 research credit of approximately $200 million.
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