Regions Bank 2008 Annual Report Download - page 148

From time to time Regions engages in business plans that may also have an effect on its tax liabilities.
While Regions has obtained the opinion of advisors that the tax aspects of these strategies should prevail,
examination of Regions’ income tax returns or changes in tax law may impact the tax benefits of these plans.
The provisions for income taxes from continuing operations charged to earnings are summarized for the
years ended December 31 as follows:
Current
expense
Deferred tax
(benefit) expense Total
(In thousands)
2008
Federal .................................................... $ 31,667 $(317,659) $(285,992)
State ...................................................... 26,970 (89,092) (62,122)
$ 58,637 $(406,751) $(348,114)
2007
Federal .................................................... $750,749 $(119,970) $ 630,779
State ...................................................... 18,682 (3,774) 14,908
$769,431 $(123,744) $ 645,687
2006
Federal .................................................... $530,425 $ 59,031 $ 589,456
State ...................................................... 27,576 2,068 29,644
$558,001 $ 61,099 $ 619,100
UNCERTAIN TAX POSITIONS
Regions and its subsidiaries file income tax returns in the United States, as well as various state
jurisdictions. As the successor of acquired taxpayers, Regions is responsible for the resolution of audits from
both federal and state taxing authorities. In December 2008, the Company reached an agreement with the Internal
Revenue Service (“IRS”) Appeals Division on the Federal tax treatment of a broad range of uncertain tax
positions. The agreement covered the Federal tax returns of Regions Financial Corporation, Union Planters
Corporation and AmSouth Bancorporation for tax years 1999-2006. With few exceptions in certain jurisdictions,
the Company is no longer subject to state and local income tax examinations by tax authorities for years before
2000, which would include audits of acquired entities. Certain states have proposed various adjustments to the
Company’s previously filed tax returns. Management is currently evaluating those proposed adjustments;
however, the Company does not anticipate the adjustments would result in a material change to its financial
position or results of operations.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
2008 2007
(In thousands)
Balance at beginning of year ................................................ $746,314 $635,716
Additions based on tax positions taken in a prior period ....................... 1,516 —
Additions based on tax positions related to the current year .................... 75,808 139,219
Settlements .......................................................... (768,994) (28,621)
Balance at end of year ..................................................... $ 54,644 $746,314
Essentially all of the Company’s liability for gross unrecognized tax benefits as of December 31, 2008
would reduce the Company’s effective tax rate, if recognized. Additionally, as of December 31, 2008, the
Company recognized a liability of approximately $31 million for interest, on a pre-tax basis. During the year
ended December 31, 2008, Regions recognized interest expense, on a pre-tax basis, on uncertain tax positions of
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