Sprint - Nextel 2013 Annual Report Download - page 155

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
We file income tax returns in the U.S. federal jurisdiction and each state jurisdiction which imposes an income tax. We also file income tax returns in a
number of foreign jurisdictions. However, our foreign income tax activity has been immaterial.
Settlement agreements were reached with the Appeals or Exam division of the Internal Revenue Service (IRS) for examination issues in dispute for
years prior to 2010. The issues were immaterial to our consolidated financial statements. As of
December 31, 2013 , there are no federal income tax examinations
being handled by the IRS Exam division nor are there any issues being handled by the IRS Appeals division.
We are involved in multiple state income tax examinations related to various years beginning with 1996, which are in various stages of the
examination, administrative review or appellate process. Based on our current knowledge of the examinations, administrative reviews and appellate processes,
we believe it is reasonably possible a number of our uncertain tax positions may be resolved during the next twelve months which could result in a reduction of
up to
$25 million in our unrecognized tax benefits.
The federal and state statutes of limitations for assessment of tax liability generally lapse three and four years, respectively, after the date the tax
returns are filed. However, income tax attributes that are carried forward, such as net operating loss carryforwards, may be challenged and adjusted by taxing
authorities at any time prior to the expiration of the statute of limitations for the tax year in which they are utilized.
Litigation, Claims and Assessments
In March 2009, a stockholder brought suit, Bennett v. Sprint Nextel Corp., in the U.S. District Court for the District of Kansas, alleging that Sprint
Communications and three of its former officers violated Section 10(b) of the Exchange Act and Rule 10b
- 5 by failing adequately to disclose certain alleged
operational difficulties subsequent to the Sprint
- Nextel merger, and by purportedly issuing false and misleading statements regarding the write - down of
goodwill. The plaintiff seeks class action status for purchasers of Sprint Communications common stock from October 26, 2006 to February 27, 2008. On January
6, 2011, the Court denied the motion to dismiss. Subsequently, our motion to certify the January 6, 2011 order for an interlocutory appeal was denied, and
discovery is continuing. The plaintiff moved to certify a class of bondholders as well as owners of common stock, and Sprint Communications has opposed that
motion. Sprint Communications believes the complaint is without merit and intends to continue to defend the matter vigorously. We do not expect the resolution
of this matter to have a material adverse effect on our financial position or results of operations.
In addition, five related stockholder derivative suits were filed against Sprint Communications and certain of its present and/or former officers and
directors. The first, Murphy v. Forsee, was filed in state court in Kansas on April 8, 2009, was removed to federal court, and was stayed by the court pending
resolution of the motion
F - 37
Successor
Predecessor
Year Ended
December 31,
191 Days Ended July
10,
Years Ended
December 31,
2013
2013
2012
2011
(in millions)
Balance at beginning of period
$
—
$
171
$
225
$
228
Predecessor balance acquired in the SoftBank Merger
182
—
—
—
Additions based on current year tax positions
10
4
1
4
Additions based on prior year tax positions
—
7
1
4
Reductions for prior year tax positions
—
—
(1
)
(1
)
Reductions for settlements
(23
)
—
(52
)
(2
)
Reductions for lapse of statute of limitations
(3
)
—
(3
)
(8
)
Balance at end of period
$
166
$
182
$
171
$
225
Note 12.
Commitments and Contingencies