Google 2015 Annual Report Download - page 98

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Table of Contents Alphabet Inc. and Google Inc.
94
Balance as of January 1, 2013 $ 1,907
Increases related to prior year tax positions 158
Decreases related to prior year tax positions (37)
Decreases related to settlement with tax authorities (78)
Increases related to current year tax positions 552
Balance as of December 31, 2013 2,502
Increases related to prior year tax positions 66
Decreases related to prior year tax positions (44)
Decreases related to settlement with tax authorities (1)
Increases related to current year tax positions 771
Balance as of December 31, 2014 3,294
Increases related to prior year tax positions 224
Decreases related to prior year tax positions (176)
Decreases related to settlement with tax authorities (27)
Increases related to current year tax positions 852
Balance as of December 31, 2015 $ 4,167
The total amount of gross unrecognized tax benefits was $2,502 million, $3,294 million, and $4,167 million as of
December 31, 2013, 2014, and 2015, respectively, of which, $2,309 million, $2,909 million, and $3,614 million, if
recognized, would affect our effective tax rate.
As of December 31, 2014 and 2015, we had accrued $239 million and $348 million in interest and penalties in
provision for income taxes.
We file income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions, our two
major tax jurisdictions are the U.S. federal and Ireland. We are subject to the continuous examination of our income
tax returns by the IRS and other tax authorities. The IRS completed its examination of our 2003 through 2006 tax
years; all issues have been settled except for one which we have filed an appeal with the IRS and plan to litigate in
court. The IRS is currently in examination of our 2007 through 2012 tax years. We have also received tax assessments
in multiple foreign jurisdictions asserting transfer pricing adjustments or permanent establishment. We continue to
defend any and all such claims as presented.
Our 2013, 2014, and 2015 tax years remain subject to examination by the IRS for U.S. federal tax purposes, and
our 2011 through 2015 tax years remain subject to examination by the appropriate governmental agencies for Irish
tax purposes. There are other ongoing audits in various other jurisdictions that are not material to our financial
statements.
We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the
adequacy of our provision for income taxes. We continue to monitor the progress of ongoing discussions with tax
authorities and the impact, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions.
We believe that an adequate provision has been made for any adjustments that may result from tax examinations.
However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in our tax audits are
resolved in a manner not consistent with management's expectations, we could be required to adjust our provision for
income taxes in the period such resolution occurs. Although the timing of resolution, settlement, closure of audits is
not certain, we do not believe it is reasonably possible that our unrecognized tax benefits will materially change in the
next 12 months.
Note 16. Information about Segments and Geographic Areas
In conjunction with the Alphabet reorganization, in the fourth quarter of 2015, we implemented legal and operational
changes in how our Chief Operating Decision Maker (CODM) manages our businesses, including resource allocation
and performance assessment. Consequently, we have multiple operating segments, representing the individual
businesses run separately under the Alphabet structure.
Google is our only reportable segment. None of our other segments meet the quantitative thresholds to qualify
as reportable segments; therefore, the operating segments are combined and disclosed below as Other Bets. All prior-
period amounts have been adjusted retrospectively to reflect the reportable segment change.
Our reported segments are described below: