Ford 2009 Annual Report Download - page 147

Notes to the Financial Statements
Ford Motor Company | 2009 Annual Report 145
NOTE 23. INCOME TAXES (Continued)
Tax Benefits Preservation Plan
On September 11, 2009, our Board of Directors adopted a tax benefit preservation plan designed to preserve
shareholder value and the value of certain tax assets including net operating losses, capital losses, and tax credit
carryforwards ("Tax Attributes"). At December 31, 2009, we had Tax Attributes that would offset $17 billion of U.S. taxable
income. Our ability to use these Tax Attributes would be substantially limited if there were an "ownership change" as
defined under Section 382 of the Internal Revenue Code. In general, an ownership change would occur if 5-percent
shareholders (as defined under U.S. federal income tax laws) collectively increase their ownership in Ford by more than
50 percentage points over a rolling three-year period.
In connection with the tax benefit preservation plan, our Board of Directors declared a dividend of one preferred share
purchase right for each share of Ford Common Stock and Class B Stock outstanding as of the close of business on
September 25, 2009. In accordance with the Plan, shares held by any person who acquires, without the approval of our
Board of Directors, beneficial ownership of 4.99% or more of outstanding Ford Common Stock (including any ownership
interest held by that person's affiliates and associates as defined under the tax benefit preservation plan) could be subject
to significant dilution.
Other
We adopted the provisions of the accounting standard for uncertainty in income taxes on January 1, 2007. As a result
of its implementation, we recorded an increase of $1.3 billion to Retained earnings.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows for the years listed
(in millions):
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The amount of unrecognized tax benefits at December 31, 2009 and 2008 that would affect the effective tax rate if
recognized was $745 million and $964 million, respectively.
The U.S. and Canadian governments have reached agreement on our transfer pricing methodologies. The agreement
covers a number of years and has resulted in a favorable impact to the income tax provision of $196 million in 2009 after
the impact of valuation allowances, primarily resulting from the refund of prior Canadian tax payments.
Examinations by tax authorities have been completed through 1999 in Germany, 2001 in Sweden, 2004 in Canada,
2005 in the United States, and 2006 in the United Kingdom. Although examinations have been completed in these
jurisdictions, various unresolved transfer pricing disputes exist for years dating back to 1994.
During 2009 and 2008, we recorded in our consolidated statement of operations approximately $54 million and
$69 million in tax related interest income, respectively. As of December 31, 2009 and 2008, we had recorded a net
payable of $38 million, and a net receivable of $177 million, respectively, for tax-related interest.