3M 2015 Annual Report Download - page 75
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Please find page 75 of the 2015 3M annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.TableofContents
ReconciliationofEffectiveIncomeTaxRate
2015 2014 2013
StatutoryU.S.taxrate 35.0 % 35.0 % 35.0 %
Stateincometaxes-netoffederalbenefit 1.1 0.9 0.9
Internationalincometaxes-net (3.8) (5.8) (6.3)
U.S.researchanddevelopmentcredit (0.5) (0.4) (0.7)
Reservesfortaxcontingencies (1.0) 0.6 1.2
DomesticManufacturer’sdeduction (1.8) (1.3) (1.6)
Allother-net 0.1 (0.1) (0.4)
Effectiveworldwidetaxrate 29.1 % 28.9 % 28.1 %
Theeffectivetaxratefor2015was29.1percent,comparedto28.9percentin2014,anincreaseof0.2percentagepoints,impactedby
severalfactors.FactorswhichincreasedtheCompany’seffectivetaxrateincludedinternationaltaxes,whichwereimpactedby
changesinforeigncurrencyratesandchangestothegeographicmixofincomebeforetaxes,andotheritems.Combined,these
factorsincreasedtheCompany’seffectivetaxrateby2.4percentagepoints.Thisincreasewaspartiallyoffsetbya2.2percentage
pointdecrease,whichrelatedtotheremeasurementsof3M’suncertaintaxpositions,includingtherestorationoftaxbasisoncertain
assetsforwhichdepreciationdeductionswerepreviouslylimited,andincreasesinthedomesticmanufacturer’sdeductionandU.S.
researchanddevelopmentcreditbenefits.
Theeffectivetaxratefor2014was28.9percent,comparedto28.1percentin2013,anincreaseof0.8percentagepoints,impacted
bymanyfactors.FactorswhichincreasedtheCompany’seffectivetaxrateincludedaone-timeinternationaltaximpactrelatedtothe
establishmentofthesupplychaincenterofexpertiseinEurope,decreasedU.S.researchanddevelopmentcreditin2014comparedto
2013duetotwoyearsinclusionasaresultofthereinstatementin2013,decreaseddomesticmanufacturer’sdeduction,andother
items.Combined,thesefactorsincreasedtheCompany’seffectivetaxrateby1.6percentagepoints.Thisincreasewaspartiallyoffset
bya0.8percentagepointdecrease,whichrelatedtobothlower3Mincometaxreservesfor2014whencomparedto2013and
internationaltaxesasaresultofchangestothegeographicmixofincomebeforetaxes.
TheCompanyfilesincometaxreturnsintheU.S.federaljurisdiction,andvariousstatesandforeignjurisdictions.Withfew
exceptions,theCompanyisnolongersubjecttoU.S.federal,stateandlocal,ornon-U.S.incometaxexaminationsbytaxauthorities
foryearsbefore2005.
TheIRShascompleteditsfieldexaminationoftheCompany’sU.S.federalincometaxreturnsfortheyears2005through2013.The
CompanyprotestedcertainIRSpositionswithinthesetaxyearsandenteredintotheadministrativeappealsprocesswiththeIRS.In
December2012,theCompanyreceivedastatutorynoticeofdeficiencyforthe2006year.TheCompanyfiledapetitioninTaxCourt
inthefirstquarterof2013relatingtothe2006taxyear.Currently,theCompanyisunderexaminationbytheIRSforitsU.S.federal
incometaxreturnsfortheyears2014and2015.ItisanticipatedthattheIRSwillcompleteitsexaminationoftheCompanyfor2014
bytheendofthefirstquarterof2016andfor2015bytheendofthefirstquarterof2017.AsofDecember31,2015,theIRShasnot
proposedanysignificantadjustmentstotheCompany’staxpositionsforwhichtheCompanyisnotadequatelyreserved.
Paymentsrelatingtootherproposedassessmentsarisingfromthe2005through2015examinationsmaynotbemadeuntilafinal
agreementisreachedbetweentheCompanyandtheIRSonsuchassessmentsoruponafinalresolutionresultingfromthe
administrativeappealsprocessorjudicialaction.InadditiontotheU.S.federalexamination,thereisalsoauditactivityinseveral
U.S.stateandforeignjurisdictions.
3ManticipateschangestotheCompany’suncertaintaxpositionsduetotheclosingandresolutionofauditissuesforvariousaudit
yearsmentionedaboveandclosureofstatutes.TheCompanyisnotcurrentlyabletoreasonablyestimatetheamountbywhichthe
liabilityforunrecognizedtaxbenefitswillincreaseordecreaseduringthenext12monthsasaresultoftheongoingincometax
authorityexaminations.
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