eBay 2009 Annual Report Download - page 128

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On January 1, 2007, we adopted new accounting guidance as issued by the FASB related to unrecognized
tax benefits which resulted in a $145,000 adjustment to beginning retained earnings.
The following table reflects changes in the unrecognized tax benefits since January 1, 2008:
2008 2009
(in thousands)
Gross amounts of unrecognized tax benefits as the beginning of the period . . $494,253 $701,374
Increases related to prior year tax provisions .......................... 5,220 26,247
Increases related to current year tax provisions ........................ 201,901 110,995
Gross amounts of unrecognized tax benefits as of the end of the period ..... $701,374 $838,616
As of December 31, 2008 and 2009, our liabilities for unrecognized tax benefits were included in deferred
and other tax liabilities, net.
The total liabilities for unrecognized tax benefits and the increase in these liabilities in 2009 relate primarily
to the allocations of revenue and costs among our global operations, the impact from acquisitions and the impact
of tax rulings made during the period affecting our tax positions. Our liabilities for unrecognized tax benefits are
recorded as deferred and other tax liabilities, net in our consolidated balance sheet. If recognized, the portion of
liabilities for unrecognized tax benefits that would decrease our provision for income taxes and increase our net
income is $831.2 million. The impact on net income reflects the liabilities for unrecognized tax benefits net of
certain deferred tax assets and the federal tax benefit of state income tax items.
Over the next twelve months, our existing tax positions will continue to generate an increase in liabilities for
unrecognized tax benefits. We recognize interest and/or penalties related to uncertain tax positions in income tax
expense. The amount of interest and penalties accrued as of December 31, 2008 and 2009 was approximately
$52.6 million and $90.5 million, respectively.
We are subject to taxation in the U.S. and various states and foreign jurisdictions. We are under examination
by certain tax authorities for the 2003 to 2008 tax years. The material jurisdictions in which we are subject to
potential examination by tax authorities for tax years after 2002 include, among others, the U.S. (Federal and
California), France, Germany, Italy, Korea, Switzerland and Singapore. We believe that adequate amounts have
been reserved for any adjustments that may ultimately result from these examinations. Although timing of the
resolution of these audits are uncertain, we do not believe it is reasonably likely that the total amount of the
unrecognized tax benefits as of December 31, 2009 will materially change in the next 12 months.
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