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Table of Contents
96
Reserves
A number of years may elapse before a particular matter, for which we have established a reserve, is audited
and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction. Our
major taxing jurisdictions and the related open tax audits are as follows:
Jurisdiction Years Open to
Audit
Years Currently
Under Audit
United States 2010-2014 None
Mexico 2010-2014 None
United Kingdom 2013-2014 None
Canada (Domestic) 2011-2014 2011-2013
Canada (International) 2008-2014 2008-2013
Russia 2012-2014 2012-2014
While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter,
we believe that our reserves reflect the probable outcome of known tax contingencies. We adjust these
reserves, as well as the related interest, in light of changing facts and circumstances. Settlement of any
particular issue would usually require the use of cash. Favorable resolution would be recognized as a reduction
to our annual tax rate in the year of resolution. For further unaudited information on the impact of the resolution
of open tax issues, see “Other Consolidated Results” in Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
In the fourth quarter of 2015, we reached an agreement with the IRS resolving substantially all open matters
related to the audits of taxable years 2010 and 2011 (two immaterial matters were still open as of December
26, 2015). The agreement resulted in a fourth quarter non-cash tax benefit totaling $230 million.
In 2013, we reached an agreement with the IRS resolving all open matters related to the audits for taxable
years 2003 through 2009. As a result, we made U.S. Federal net cash tax payments of $758 million, including
interest. The settlement reduced our 2013 net cash provided by operating activities and our reserves for
uncertain tax positions for the tax years 2003 through 2012 and resulted in a non-cash tax benefit of $209
million in 2013. In addition, payments for other U.S. Federal, state and local tax matters related to open tax
years totaling $226 million were made in 2013. See additional unaudited information in “Items Affecting
Comparability” in Management’s Discussion and Analysis of Financial Condition and Results of Operations.
As of December 26, 2015, the total gross amount of reserves for income taxes, reported in other liabilities,
was $1,547 million. We accrue interest related to reserves for income taxes in our provision for income taxes
and any associated penalties are recorded in selling, general and administrative expenses. The gross amount
of interest accrued, reported in other liabilities, was $144 million as of December 26, 2015, of which $14
million of expense was recognized in 2015. The gross amount of interest accrued, reported in other liabilities,
was $141 million as of December 27, 2014, of which $31 million of expense was recognized in 2014.