General Motors 2015 Annual Report Download - page 97

Table of Contents



As a result of business restructuring and improving profitability in certain European businesses evidenced by three years of adjusted cumulative earnings
and the completion of our near- and medium-term business plans in the three months ended December 31, 2015 that forecast continuing improvement in
profitability, we determined that it was more likely than not that our future earnings will be sufficient to realize the deferred tax assets in these European
businesses. Accordingly we reversed $3.9 billion of GME's valuation allowances resulting in an income tax benefit. We retained valuation allowances of $2.5
billion at December 31, 2015 against deferred tax assets in GME which we continue to believe do not meet the more likely than not threshold for releasing
the valuation allowance.
At December 31, 2015 we retained additional valuation allowances against deferred tax assets of $2.5 billion, primarily in South Korea and India business
units with cumulative losses in recent years and in the U.S. related to capital loss tax attributes and state loss carryforwards that we do not expect to have the
ability to utilize within the carryforward periods.

The following table summarizes activity of the total amounts of unrecognized tax benefits (dollars in millions):




Beginning balance $ 1,877
$ 2,530
$ 2,745
Additions to current year tax positions 54
184
251
Additions to prior years' tax positions 115
149
276
Reductions to prior years' tax positions (378)
(603)
(535)
Reductions in tax positions due to lapse of statutory limitations (201)
(164)
(73)
Settlements (3)
(138)
(132)
Other (79)
(81)
(2)
Ending balance $ 1,385
$ 1,877
$ 2,530
At December 31, 2015 and 2014 there were $896 million 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, 2015, 2014 and 2013 income tax related interest and penalties were insignificant. At
December 31, 2015 and 2014 we had liabilities of $183 million and $246 million for income tax related interest and penalties.
In the year ended December 31, 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.
At December 31, 2015 it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits in the next twelve
months.

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 2015 with various significant tax jurisdictions. Tax authorities may have the ability to review and adjust net operating loss or tax credit
carryforwards that were generated prior to these periods if utilized in an open tax year. 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.
93