INCOME TAXES	9 Months Ended
Sep. 30, 2013
INCOME TAXES
INCOME TAXES	9. INCOME TAXES Income tax expense is provided on an interim basis based on management’s estimate of the annual effective income tax rate and includes the tax effects of certain discrete items, such as changes in tax laws or tax rates or other unusual or nonrecurring tax adjustments in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year or a year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The effective tax rate is highly dependent on the geographic distribution of Bunge’s worldwide earnings or losses and tax regulations in each jurisdiction. Management regularly monitors the assumptions used in estimating its annual effective tax rate and adjusts estimates accordingly. If actual results differ from management’s estimates, reported income tax expense in future periods could be materially affected. For the nine months ended September 30, 2013 and 2012, income tax expense related to continuing operations was $702 million and $197 million, respectively. The increase in tax expense over the prior year results primarily from discrete tax items as discussed in the following paragraph. As a global enterprise, Bunge files income tax returns that are subject to periodic examination and challenge by federal, state and foreign tax authorities. In many jurisdictions, income tax examinations, including settlement negotiations or litigation, may take several years to finalize. While it is often difficult to predict the final outcome or timing of resolution of any particular matter, management believes that the condensed consolidated financial statements reflect the largest amount of tax benefit that will be more likely than not realized. During the nine months ended September 30, 2013, Bunge increased its liability for uncertain tax positions by $19 million and recorded an income tax expense primarily as a result of recently published litigation precedents in Brazil. Of this amount, $22 million is included in income from continuing operations and $17 million is included in discontinued operations, net of tax. During the nine months ended September 30, 2013, Bunge recorded income tax expense of $496 million related to other discrete tax items including $464 million related to the recording of a full valuation allowance on deferred tax assets in its industrial sugar business in Brazil. Management’s establishment of a valuation allowance resulted from a combination of matters, including increasing cumulative book and tax net losses in the business (including financing costs), the absence of available independent evidence that such losses will not continue given Brazil’s existing energy policy, and the market environment and outlook for the industry and management’s intent to explore strategic options related to the future of this business. In 2013, the Brazilian tax authorities commenced an examination of the income tax return of one of Bunge’s Brazilian subsidiaries for the year 2009 and proposed adjustments totalling approximately $121 million plus applicable interest and penalties. Management, in consultation with external legal advisors, has reviewed and responded to the proposed adjustments and believes that it is more likely than not that it will prevail and therefore has not recorded any additional uncertain tax liability. During 2011, the Brazilian tax authorities commenced an examination of the income tax returns of one of Bunge’s Brazilian subsidiaries for the years 2005-2009 and proposed adjustments totaling approximately $160 million plus applicable interest and penalties. Management, in consultation with external legal advisors, has reviewed and responded to the proposed adjustments and believes that it is more likely than not that it will prevail and therefore has, apart from the above mentioned liability for uncertain tax positions related to the recently published litigation precedents, not recorded any additional uncertain tax liability. In 2010, the Brazilian tax authorities proposed certain significant adjustments to the income tax returns for one of Bunge’s Brazilian subsidiaries for the years 2005 to 2007. The proposed adjustments totaled approximately $525 million plus applicable interest and penalties. In late 2011, Bunge received a decision from the Tax Inspector that dismissed approximately $170 million of the claim against Bunge. Management is appealing the remainder of the case and has not changed its position that it is more likely than not that it will prevail and therefore has, apart from the above mentioned liability for uncertain tax positions related to the recently published litigation precedents, not recorded any additional uncertain tax liability.

9. INCOME TAXES

Income tax expense is provided on an interim basis based on management’s estimate of the annual effective income tax rate and includes the tax effects of certain discrete items, such as changes in tax laws or tax rates or other unusual or nonrecurring tax adjustments in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year or a year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The effective tax rate is highly dependent on the geographic distribution of Bunge’s worldwide earnings or losses and tax regulations in each jurisdiction. Management regularly monitors the assumptions used in estimating its annual effective tax rate and adjusts estimates accordingly. If actual results differ from management’s estimates, reported income tax expense in future periods could be materially affected.

For the nine months ended September 30, 2013 and 2012, income tax expense related to continuing operations was $702 million and $197 million, respectively. The increase in tax expense over the prior year results primarily from discrete tax items as discussed in the following paragraph.

As a global enterprise, Bunge files income tax returns that are subject to periodic examination and challenge by federal, state and foreign tax authorities. In many jurisdictions, income tax examinations, including settlement negotiations or litigation, may take several years to finalize. While it is often difficult to predict the final outcome or timing of resolution of any particular matter, management believes that the condensed consolidated financial statements reflect the largest amount of tax benefit that will be more likely than not realized. During the nine months ended September 30, 2013, Bunge increased its liability for uncertain tax positions by $19 million and recorded an income tax expense primarily as a result of recently published litigation precedents in Brazil. Of this amount, $22 million is included in income from continuing operations and $17 million is included in discontinued operations, net of tax.

During the nine months ended September 30, 2013, Bunge recorded income tax expense of $496 million related to other discrete tax items including $464 million related to the recording of a full valuation allowance on deferred tax assets in its industrial sugar business in Brazil. Management’s establishment of a valuation allowance resulted from a combination of matters, including increasing cumulative book and tax net losses in the business (including financing costs), the absence of available independent evidence that such losses will not continue given Brazil’s existing energy policy, and the market environment and outlook for the industry and management’s intent to explore strategic options related to the future of this business.

In 2013, the Brazilian tax authorities commenced an examination of the income tax return of one of Bunge’s Brazilian subsidiaries for the year 2009 and proposed adjustments totalling approximately $121 million plus applicable interest and penalties. Management, in consultation with external legal advisors, has reviewed and responded to the proposed adjustments and believes that it is more likely than not that it will prevail and therefore has not recorded any additional uncertain tax liability.

During 2011, the Brazilian tax authorities commenced an examination of the income tax returns of one of Bunge’s Brazilian subsidiaries for the years 2005-2009 and proposed adjustments totaling approximately $160 million plus applicable interest and penalties. Management, in consultation with external legal advisors, has reviewed and responded to the proposed adjustments and believes that it is more likely than not that it will prevail and therefore has, apart from the above mentioned liability for uncertain tax positions related to the recently published litigation precedents, not recorded any additional uncertain tax liability.

In 2010, the Brazilian tax authorities proposed certain significant adjustments to the income tax returns for one of Bunge’s Brazilian subsidiaries for the years 2005 to 2007. The proposed adjustments totaled approximately $525 million plus applicable interest and penalties. In late 2011, Bunge received a decision from the Tax Inspector that dismissed approximately $170 million of the claim against Bunge. Management is appealing the remainder of the case and has not changed its position that it is more likely than not that it will prevail and therefore has, apart from the above mentioned liability for uncertain tax positions related to the recently published litigation precedents, not recorded any additional uncertain tax liability.