Our net foreign pretax losses include jurisdictions with both pretax earnings and pretax losses. Our
consolidated financial statements provide taxes for all related tax liabilities that would arise upon repatriation of
earnings in the foreign jurisdictions where we do not intend to indefinitely reinvest those earnings outside the
United States, and the amount of taxes provided for has been insignificant.
The following table reflects changes in the gross unrecognized tax benefits (in millions):
Year Ended December 31,
2012
2011
2010
Gross unrecognized tax benefits-beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 63
$ 18
$
9
Increase related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
5
1
Decreases related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(16)
(2)
(2)
Increases related to current year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
104
42
10
Gross unrecognized tax benefits-end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$164
$ 63
$ 18
During all years presented, we recognized interest and penalties related to unrecognized tax benefits within
the provision for income taxes on the consolidated statements of income. For the year ended December 31, 2012,
we recognized interest of $3 million and penalties of $1 million. The amount of interest and penalties accrued as
of December 31, 2012 and 2011 was $10 million and $6 million, respectively.
If the remaining balance of gross unrecognized tax benefits of $164 million as of December 31, 2012 was
realized in a future period, this would result in a tax benefit of $70 million within our provision of income taxes
at such time.
We are subject to taxation in the United States and various other state and foreign jurisdictions. The material
jurisdictions in which we are subject to potential examination include the United States and Ireland. We are
under examination by the Internal Revenue Service (IRS) for our 2008 through 2010 tax years. We believe that
adequate amounts have been reserved for any adjustments that may ultimately result from these examinations
and we do not anticipate a significant impact to our gross unrecognized tax benefits within the next 12 months
related to these years. Our 2011 and 2012 tax years remain subject to examination by the IRS and all tax years
starting in 2008 remain subject to examination in Ireland. We remain subject to possible examinations or are
undergoing audits in various other jurisdictions that are not material to our financial statements.
Although the timing of the resolution, settlement, and closure of any audits is highly uncertain, it is
reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12
months. However, given the number of years remaining that are subject to examination, we are unable to
estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits.
Note 14. Geographical Information
Revenue by geography is based on the billing address of the advertiser or Platform developer. The following
table sets forth revenue and property and equipment, net by geographic area (in millions):
Year Ended December 31,
2012
2011
2010
Revenue:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,578
$2,067
$1,223
Rest of the world
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,511
1,644
751
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$5,089
$3,711
$1,974
(1) No individual country exceeded 10% of our total revenue for any period presented.
99