Verizon Wireless 2007 Annual Report Download - page 68

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Notes to Consolidated Financial Statements continued
FASB Interpretation No. 48
Effective January 1, 2007, we adopted FIN 48, which prescribes the rec-
ognition, measurement and disclosure standards for uncertainties in
income tax positions. See Note 1 for a discussion of the impact to Verizon
of adopting this new accounting pronouncement.
A reconciliation of the beginning and ending balance of unrecognized
tax benefits is as follows:
(dollars in millions)
Balance at January 1, 2007 $ 2,958
Additions based on tax positions related to the current year 141
Additions for tax positions of prior years 291
Reductions for tax positions of prior years (420)
Settlements (11)
Lapses of statutes of limitations (76)
Balance at December 31, 2007 $ 2,883
Included in the total unrecognized tax benefits at December 31, 2007
is $1,245 million that, if recognized, would favorably affect the effec-
tive income tax rate. The remaining unrecognized tax benefits relate to
temporary items that would not affect the effective income tax rate and
uncertain tax positions resulting from prior acquisitions which, pursuant
to current purchase accounting tax rules, would adjust goodwill.
We recognize any interest and penalties accrued related to unrecognized
tax benefits in income tax expense. During the year ended December
31, 2007, we recognized approximately $154 million (after-tax) for the
payment of interest and penalties. We had approximately $598 million
(after-tax) and $444 million (after-tax) for the payment of interest and
penalties accrued in the balance sheet at December 31, 2007 and January
1, 2007, respectively.
Verizon or one of its subsidiaries files income tax returns in the U.S. fed-
eral jurisdiction, and various state, local and foreign jurisdictions. The
Company is generally no longer subject to U.S. federal, state and local, or
non-U.S. income tax examinations by tax authorities for years before 2000.
The Internal Revenue Service (IRS) is currently examining the Company’s
U.S. income tax returns for years 2000 through 2003. As a large taxpayer,
we are under continual audit by the IRS and other taxing authorities on
numerous open tax positions. It is possible that the amount of the lia-
bility for unrecognized tax benefits could change by a significant amount
during the next twelve month period. An estimate of the range of the
possible change cannot be made until issues are further developed or
examinations close.
NOTE 17
SEGMENT INFORMATION
Reportable Segments
On March 30, 2007, we completed the sale of our 52% interest in TELPRI.
On February 12, 2007 we entered into an MOU to sell our interest in
CANTV. On December 1, 2006, we closed the sale of Verizon Dominicana.
Consequently, with these three transactions, we completed the disposi-
tion of our International segment. For further information concerning the
disposition of the International segment, see Note 2.
On November 17, 2006, we completed the spin-off of our Information
Services segment which included our domestic print and Internet yellow
pages directories business. For further information concerning the dispo-
sition of the Information Services segment, see Note 2.
We now have two reportable segments, which we operate and manage
as strategic business units and organize by products and services. We
measure and evaluate our reportable segments based on segment
income. Corporate, eliminations and other includes unallocated corpo-
rate expenses, intersegment eliminations recorded in consolidation, the
results of other businesses such as our investments in unconsolidated
businesses, lease financing, and other adjustments and gains and losses
that are not allocated in assessing segment performance due to their
non-recurring or unusual nature. These adjustments include transactions
that the chief operating decision makers exclude in assessing business
unit performance due primarily to their non-recurring and/or non-opera-
tional nature. Although such transactions are excluded from the business
segment results, they are included in reported consolidated earnings.
Gains and losses that are not individually significant are included in all
segment results, since these items are included in the chief operating
decision makers’ assessment of unit performance.
Our segments and their principal activities consist of the following:
Segment Description
Wireline Wireline communications services include voice, Internet
access, broadband video and data, next generation IP
network services, network access, long distance and other
services. We provide these services to consumers, carriers,
businesses and government customers both domestically
and internationally in 150 countries.
Domestic Wireless Domestic Wireless’s products and services include wireless
voice, data products, and other value-added services and
equipment sales across the United States.