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PART II
ITEM8.Notes to Consolidated Financial Statements
AsofDecember31,2013,ourfederalandstatecapitallosscarryforwardsforincometaxpurposeswereapproximately$349million
and$560million.Wealsohavedeferredtaxassetsforimpairmentlossesthat,ifrecognized,willbecapitalinnature.Webelieve
thatitismorelikelythannotthatourdeferredtaxassetsforcapitallossesandimpairmentlosseswillnotberealized.Therefore,
wehaverecordedavaluationallowanceonbothourfederalandstatedeferredtaxassetsfortheseitems.Wewillreassessthe
valuationallowancequarterlyandiffutureevidenceallowsforapartialorfullreleaseofthevaluationallowance,ataxbenet
willberecordedaccordingly.
InDecember2012,weenteredintoanagreementwithArrisGroupInc.(Arris)forthedispositionoftheMotorolaHomesegment.
AdeferredtaxassetwasestablishedforthebooktotaxbasisdierenceinourinvestmentintheMotorolaHomesegmentupon
signingtheagreementbecausethebasisdierencewasgoingtoberecognizedintheforeseeablefuture.InApril2013,upon
thedispositionoftheHomesegmenttoArris,ourbasisdierenceintheHomesegmentbecameabasisdierenceinGoogle’s
investmentinArrissharesreceivedinthedispositionandwasadjustedbytheamountofcashreceivedaspartofthetransaction.
SinceanyfuturelossestoberecognizeduponthedispositionofArrisshareswillbecapitallossesandwealreadyhaveanexcess
capitallosscarryforward,afullvaluationallowancewasrecordedagainstthisdeferredtaxasset.Wewillreassessthevaluation
allowancequarterlyandiffutureevidenceallowsforapartialorfullreleaseofthevaluationallowance,ataxbenetwillbe
recordedaccordingly.
Uncertain Tax Positions
ThefollowingtablesummarizestheactivityrelatedtoourgrossunrecognizedtaxbenetsfromJanuary1,2011toDecember31,
2013(inmillions):
BalanceasofJanuary1,2011 $1,140
Increasesrelatedtoprioryeartaxpositions 77
Decreasesrelatedtoprioryeartaxpositions (9)
Decreasesrelatedtosettlementwithtaxauthorities (5)
Increasesrelatedtocurrentyeartaxpositions 361
BalanceasofDecember31,2011 1,564
Increasesrelatedtoprioryeartaxpositions 43
Decreasesrelatedtoprioryeartaxpositions (40)
Decreasesrelatedtosettlementwithtaxauthorities (62)
Increasesrelatedtoacquisition 17
Increasesrelatedtocurrentyeartaxpositions 411
BalanceasofDecember31,2012 1,933
Increasesrelatedtoprioryeartaxpositions 158
Decreasesrelatedtoprioryeartaxpositions (37)
Decreasesrelatedtosettlementwithtaxauthorities (78)
Increasesrelatedtocurrentyeartaxpositions 595
BalanceasofDecember31,2013 $2,571
Ourtotalunrecognizedtaxbenetsthat,ifrecognized,wouldaectoureectivetaxratewere$1,350million,$1,749million,and
$2,378millionasofDecember31,2011,2012,and2013.
AsofDecember31,2012and2013,wehadaccrued$139millionand$181millionforpaymentofinterestandpenalties.Interest
andpenaltiesincludedinourprovisionforincometaxeswerenotmaterialinalltheperiodspresented.
Weandoursubsidiariesareroutinelyexaminedbyvarioustaxingauthorities.AlthoughweleU.S.federal,U.S.state,andforeign
taxreturns,ourtwomajortaxjurisdictionsaretheU.S.andIreland.DuringthequarterendedDecember31,2007,theIRS
completeditsexaminationofour2003and2004taxyears.WehaveledanappealwiththeIRSforcertainissuesrelatedtothis
auditandsettlementswerereachedin2012onallbutoneissuewhichweplantolitigateincourt.Asaresultwereleasedthe
relatedreservesinthequarterendedDecember31,2012.TheIRSiscurrentlyinexaminationofour2007,2008,and2009tax
years.Weexpecttheexaminationtobecompletedwithinthenext12months,butwedonotanticipateanysignicantimpactto
ourunrecognizedtaxbenetbalanceasofDecember31,2013,relatedtoour2007,2008,and2009taxyears.
Our2010,2011,2012and2013taxyearsremainsubjecttoexaminationbytheIRSforU.S.federaltaxpurposes,andour2006
through2013taxyearsremainsubjecttoexaminationbytheappropriategovernmentalagenciesforIrishtaxpurposes.There
arevariousotherongoingauditsinvariousotherjurisdictionsthatarenotmaterialtoournancialstatements.
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