Symantec 2008 Annual Report Download - page 117

between the accounting and tax treatment of assets and liabilities, including items such as accruals and allowances
not currently deductible for tax purposes. The income tax effects of the differences we identify are classified as
current or long-term deferred tax assets and liabilities in our Consolidated Balance Sheets. Our judgments,
assumptions, and estimates relative to the current provision for income tax take into account current tax laws, our
interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and
domestic tax authorities. Changes in tax laws or our interpretation of tax laws and the resolution of current and
future tax audits could significantly impact the amounts provided for income taxes in our Consolidated Balance
Sheets and Consolidated Statements of Income. We must also assess the likelihood that deferred tax assets will be
realized from future taxable income and, based on this assessment, establish a valuation allowance, if required. Our
determination of our valuation allowance is based upon a number of assumptions, judgments, and estimates,
including forecasted earnings, future taxable income, and the relative proportions of revenue and income before
taxes in the various domestic and international jurisdictions in which we operate. To the extent we establish a
valuation allowance or change the valuation allowance in a period, we reflect the change with a corresponding
increase or decrease to our tax provision in our Consolidated Statements of Income, or to goodwill to the extent that
the valuation allowance related to tax attributes of the acquired entities.
We failed to file in a timely fashion the final pre-acquisition tax return for Veritas, and as a result, it is uncertain
whether we can claim a lower tax rate on a dividend made from a Veritas foreign subsidiary under the American
Jobs Creation Act of 2004. We are currently petitioning the IRS for relief to allow us to claim the lower rate of tax.
Because we were unable to obtain this relief prior to filing the Veritas tax return in May 2006, we have paid
$130 million of additional U.S. taxes. The potential outcomes with respect to our payment of this amount include:
• If we ultimately obtain relief from the IRS on this matter, the $130 million that we paid in May 2006 may be
refunded to us and we will use that amount to increase our income tax accrual for the Veritas transfer pricing
disputes. For more information see Note 17 of the Notes to Consolidated Financial Statements in this annual
report.
• If we ultimately do not receive relief from the IRS on this matter, and we otherwise have an adjustment
arising from the Veritas transfer pricing disputes, then we would only owe additional tax with regard to such
disputes to the extent that such adjustment is in excess of $130 million.
• If we ultimately do not receive relief from the IRS on this matter, and we otherwise do not have an
adjustment arising from the Veritas transfer pricing disputes, then (1) we would be required to adjust the
purchase price of Veritas to reflect a reduction in the amount of pre-acquisition tax liabilities assumed; and
(2) we would be required to recognize an equal amount of income tax expense, up to $130 million.
In June 2006, the Financial Accounting Standards Board, or FASB, issued Interpretation No., or FIN, 48,
Accounting for Uncertainty in Income Taxes — an interpretation of SFAS No. 109. The provisions of FIN 48
became effective beginning in the first quarter of fiscal 2008. See “Newly Adopted and Recently Issued Accounting
Pronouncements” under Summary of Significant Accounting Policies included in the Consolidated Financial
Statements in this annual report for further discussion.
In December 2007, the FASB issued SFAS No. 141 (revised), Business Combinations. The accounting
treatment related to pre-acquisition uncertain tax positions will change when SFAS No. 141(R) becomes effective,
which will be in first quarter of our fiscal year 2010. See “Newly Adopted and Recently Issued Accounting
Pronouncements” under Summary of Significant Accounting Policies included in the Consolidated Financial
Statements in this annual report for further discussion.
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