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Note 17 - Income Taxes | 12 Months Ended
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Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | NOTE 17: INCOME TAXES The components of earnings (loss) from continuing operations before income taxes and the related provision (benefit) for U.S. and other income taxes were as follows:
|  | Successor |  |  | Predecessor |
(in millions) |  | For the Four Months Ended December 31, 2013 |  |  | For the Eight Months Ended August 31, 2013 |  |  | For the Year Ended December 31, 2012 |  |  | For the Year Ended December 31, 2011 |
(Loss) earnings from continuing operations before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | (119 | ) |  | $ | 2,243 |  |  | $ | (1,647 | ) |  | $ | (641 | )
Outside the U.S. |  |  | 45 |  |  |  | 113 |  |  |  | 37 |  |  |  | (116 | )
Total |  | $ | (74 | ) |  | $ | 2,356 |  |  | $ | (1,610 | ) |  | $ | (757 | )
U.S. income taxes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current provision (benefit) |  | $ | 3 |  |  | $ | - |  |  | $ | (409 | ) |  | $ | (378 | )
Deferred provision (benefit) |  |  | 3 |  |  |  | (3 | ) |  |  | 13 |  |  |  | 241 |
Income taxes outside the U.S.: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current provision |  |  | 8 |  |  |  | 52 |  |  |  | 58 |  |  |  | 28 |
Deferred (benefit) provision |  |  | (8 | ) |  |  | 105 |  |  |  | 65 |  |  |  | 106 |
State and other income taxes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current provision (benefit) |  |  | 2 |  |  |  | 1 |  |  |  | - |  |  |  | (22 | )
Deferred provision |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7 |
Total provision (benefit) |  | $ | 8 |  |  | $ | 155 |  |  | $ | (273 | ) |  | $ | (18 | )
The differences between income taxes computed using the U.S. federal income tax rate and the provision (benefit) for income taxes for continuing operations were as follows:
|  | Successor |  |  | Predecessor |
(in millions) |  | For the Four Months Ended December 31, 2013 |  |  | For the Eight Months Ended August 31, 2013 |  |  | For the Year Ended December 31, 2012 |  |  | For the Year Ended December 31, 2011 |
Amount computed using the statutory rate |  | $ | (25 | ) |  | $ | 825 |  |  | $ | (564 | ) |  | $ | (265 | )
Increase (reduction) in taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
resulting from: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State and other income taxes, net of federal |  |  | 2 |  |  |  | - |  |  |  | 1 |  |  |  | 1 |
Unremitted foreign earnings |  |  | 36 |  |  |  | 32 |  |  |  | 35 |  |  |  | 393 |
Impact of goodwill and intangible impairments |  |  | (3 | ) |  |  | (22 | ) |  |  | - |  |  |  | - |
Operations outside the U.S. |  |  | 73 |  |  |  | (18 | ) |  |  | (90 | ) |  |  | 52 |
Legislative rate changes |  |  | - |  |  |  | 1 |  |  |  | 23 |  |  |  | 20 |
Valuation allowance |  |  | (100 | ) |  |  | 39 |  |  |  | 312 |  |  |  | (74 | )
Tax settlements and adjustments, including interest |  |  | 1 |  |  |  | 5 |  |  |  | (11 | ) |  |  | (149 | )
Discharge of Debt and Other Reorganization Related Items |  |  | 24 |  |  |  | (722 | ) |  |  | - |  |  |  | - |
Other, net |  |  | - |  |  |  | 15 |  |  |  | 21 |  |  |  | 4 |
Provision (benefit) for income taxes |  | $ | 8 |  |  | $ | 155 |  |  | $ | (273 | ) |  | $ | (18 | )
Under the Plan, a substantial portion of the Company’s pre-petition debt securities, revolving credit facility and other obligations were extinguished. Absent an exception, a debtor recognizes cancellation of indebtedness income (“CODI”) upon discharge of its outstanding indebtedness for an amount of consideration that is less than its adjusted issue price. The Internal Revenue Code of 1986, as amended (“IRC”), provides that a debtor in a bankruptcy case may exclude CODI from taxable income but must reduce certain of its tax attributes by the amount of any CODI realized as a result of the consummation of a plan of reorganization. The amount of CODI realized by a taxpayer is the adjusted issue price of any indebtedness discharged less the sum of (i) the amount of cash paid, (ii) the issue price of any new indebtedness issued and (iii) the fair market value of any other consideration, including equity, issued. As a result of the market value of equity upon emergence from chapter 11 bankruptcy proceedings, the estimated amount of U.S. CODI is approximately $821 million, which will reduce the value of Kodak’s U.S. net operating losses that had a value of $2,790 million as of December 31, 2012. The actual reduction in tax attributes does not occur until the first day of the Company’s tax year subsequent to the date of emergence, or January 1, 2014. IRC Sections 382 and 383 provide an annual limitation with respect to the ability of a corporation to utilize its tax attributes, as well as certain built-in-losses, against future U.S. taxable income in the event of a change in ownership. The Debtors’ emergence from chapter 11 bankruptcy proceedings is considered a change in ownership for purposes of IRC Section 382. The limitation under the IRC is based on the value of the corporation as of the emergence date. However, the ownership changes and resulting annual limitation will result in the expiration of an estimated $667 million of net operating losses, $577 million of foreign tax credits and $21 million of research and expenditure credits generated prior to the emergence date. The expiration of these tax attributes was fully offset by a corresponding decrease in Kodak’s U.S. valuation allowance, which results in no net tax provision. The KPP Global Settlement provided for the acquisition by the KPP of certain assets, and the assumption by the KPP of certain liabilities of Kodak’s Personalized Imaging and Document Imaging businesses. The underfunded position of the U.K. Pension Plan of approximately $1.5 billion was included in Liabilities held for sale as presented in the Consolidated Statement of Financial Position as of December 31, 2012. Kodak Limited held a deferred tax asset related to the pension liability of $329 million. As a result of the KPP Global Settlement and the release from the pension liability to the KPP, Kodak Limited has reversed the corresponding deferred tax asset. During the eight months ended August 31, 2013, Kodak determined that it was more likely than not that a portion of its deferred tax assets outside the U.S. would not be realized due to changes in the business resulting from the KPP Global Settlement and the related sales of the Business. As a result, Kodak recorded a tax provision of $100 million associated with the establishment of a valuation allowance on those deferred tax assets. Additionally, during the eight months ended August 31, 2013, Kodak determined that it was more likely than not that a portion of the deferred tax assets outside the U.S. would not be realized due to the change in Kodak’s business as a result of restructuring associated with the emergence from bankruptcy and accordingly, recorded a provision of $46 million associated with the establishment of a valuation allowance on those deferred tax assets. During 2012 and 2011, Kodak determined that it was more likely than not that a portion of the deferred tax assets outside the U.S. would not be realized due to reduced manufacturing volumes negatively impacting profitability in a location outside the U.S. and accordingly, recorded a provision of $30 million and $53 million, respectively, associated with the establishment of a valuation allowance on those deferred tax assets. In March 2011, Kodak filed a Request for Competent Authority Assistance with the United States Internal Revenue Service (“IRS”). The request related to a potential double taxation issue with respect to certain patent licensing royalty payments received by Kodak in 2012 and 2011. In the twelve months ended December 31, 2012, Kodak received notification that the IRS had reached agreement with the Korean National Tax Service (“NTS”) with regards to Kodak’s March 2011 request. As a result of the agreement reached by the IRS and NTS, Kodak was due a partial refund of Korean withholding taxes in the amount of $123 million. Kodak had previously agreed with the licensees that made the royalty payments that any refunds of the related Korean withholding taxes would be shared equally between Kodak and the licensees. The licensees’ share ($61 million) of the Korean withholding tax refund has therefore been reported as a licensing revenue reduction in Licensing & royalties in the Consolidated Statement of Operations.
|  | As of December 31, |
|  | Successor |  |  | Predecessor |
(in millions) |  | 2013 |  |  | 2012 |
Deferred tax assets |  |  |  |  |  |
Pension and postretirement obligations |  | $ | 219 |  |  | $ | 689 |
Allowed Claims |  |  | - |  |  |  | 272 |
Restructuring programs |  |  | 6 |  |  |  | 10 |
Foreign tax credit |  |  | 101 |  |  |  | 577 |
Inventories |  |  | 18 |  |  |  | 26 |
Investment tax credit |  |  | 125 |  |  |  | 153 |
Employee deferred compensation |  |  | 60 |  |  |  | 113 |
Depreciation |  |  | - |  |  |  | 57 |
Research and development costs |  |  | 276 |  |  |  | 308 |
Tax loss carryforwards |  |  | 372 |  |  |  | 1,409 |
Goodwill/Intangibles |  |  | - |  |  |  | 42 |
Other deferred revenue |  |  | 13 |  |  |  | - |
Other |  |  | 168 |  |  |  | 373 |
Total deferred tax assets |  | $ | 1,358 |  |  | $ | 4,029 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Depreciation |  | $ | 17 |  |  | $ | - |
Leasing |  |  | 23 |  |  |  | 43 |
Goodwill/Intangibles |  |  | 49 |  |  |  | - |
Other deferred debt |  |  | - |  |  |  | 11 |
Unremitted foreign earnings |  |  | 236 |  |  |  | 416 |
Other |  |  | 25 |  |  |  | 182 |
Total deferred tax liabilities |  |  | 350 |  |  |  | 652 |
Net deferred tax assets before valuation allowance |  |  | 1,008 |  |  |  | 3,377 |
Valuation allowance |  |  | 953 |  |  |  | 2,838 |
Net deferred tax assets |  | $ | 55 |  |  | $ | 539 |
Deferred tax assets (liabilities) are reported in the following components within the Consolidated Statement of Financial Position:
|  | As of December 31, |
|  | Successor |  |  | Predecessor |
(in millions) |  | 2013 |  |  | 2012 |
Deferred income taxes (current) |  | $ | 48 |  |  | $ | 75 |
Deferred income taxes (non-current) |  |  | 54 |  |  |  | 470 |
Other current liabilities |  |  | (3 | ) |  |  | (1 | )
Other long-term liabilities |  |  | (44 | ) |  |  | (5 | )
Net deferred tax assets |  | $ | 55 |  |  | $ | 539 |
As of December 31, 2013, Kodak had available domestic and foreign net operating loss carry-forwards for income tax purposes of approximately $1,382 million, of which approximately $367 million have an indefinite carry-forward period. The remaining $1,015 million expire between the years 2014 and 2033. As of December 31, 2013, Kodak had unused foreign tax credits and investment tax credits of $101 million and $125 million, respectively, with various expiration dates through 2028. Utilization of post-emergence net operating losses and tax credits may be subject to limitations in the event of significant changes in stock ownership of the Company in the future. Kodak was previously granted a tax holiday in certain jurisdictions in China, which provided eligibility for a 50% reduction of the income tax rate. During 2013, Kodak has returned to the 25% statutory tax rate in all jurisdictions in China. During 2011, Kodak concluded that the undistributed earnings of its foreign subsidiaries would no longer be considered permanently reinvested. After assessing the assets of the subsidiaries relative to specific opportunities for reinvestment, as well as the forecasted uses of cash for both its domestic and foreign operations, Kodak concluded that it was prudent to change its indefinite reinvestment assertion to allow greater flexibility in its cash management. Kodak recorded a deferred tax liability (net of related foreign tax credits) of $213 million and $374 million on the foreign subsidiaries’ undistributed earnings for years ended December 31, 2013 and 2012, respectively. This deferred tax liability was fully offset by Kodak’s U.S. valuation allowance. Kodak also recorded a deferred tax liability of $23 million and $42 million for the potential foreign withholding taxes on the undistributed earnings for years ended December 31, 2013 and 2012, respectively. Kodak’s valuation allowance as of December 31, 2013 was $953 million. Of this amount, $373 million was attributable to Kodak’s net deferred tax assets outside the U.S. of $470 million, and $580 million related to Kodak’s net deferred tax assets in the U.S. of $538 million, for which Kodak believes it is not more likely than not that the assets will be realized. The net deferred tax assets in excess of the valuation allowance of approximately $55 million relate primarily to net operating loss carry-forwards, certain tax credits, and pension related tax benefits for which Kodak believes it is more likely than not that the assets will be realized. Kodak’s valuation allowance as of December 31, 2012 was $2,838 million. Of this amount, $403 million was attributable to Kodak’s net deferred tax assets outside the U.S. of $1,001 million, and $2,435 million related to Kodak’s net deferred tax assets in the U.S. of $2,376 million, for which Kodak believes it is not more likely than not that the assets will be realized. The net deferred tax assets in excess of the valuation allowance of approximately $539 million relate primarily to net operating loss carry-forwards, certain tax credits, and pension related tax benefits for which Kodak believes it is more likely than not that the assets will be realized. Accounting for Uncertainty in Income Taxes A reconciliation of the beginning and ending amount of Kodak’s liability for income taxes associated with unrecognized tax benefits is as follows:
|  | Successor |  |  | Predecessor |
(in millions) |  | Four Months Ended |  |  | Eight Months Ended |  |  | For the Year Ended December 31, |
|  | December 31, 2013 |  |  | August 31, 2013 |  |  | 2012 |  |  | 2011 |
Balance as of January 1 |  | $ | 107 |  |  | $ | 57 |  |  | $ | 76 |  |  | $ | 245 |
Tax positions related to the current year: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Additions |  |  | - |  |  |  | 68 |  |  |  | 4 |  |  |  | 12 |
Tax Positions related to prior years: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Additions |  |  | 2 |  |  |  | 1 |  |  |  | 3 |  |  |  | 2 |
Reductions |  |  | (3 | ) |  |  | (17 | ) |  |  | (17 | ) |  |  | (183 | )
Settlements with taxing jurisdictions |  |  | - |  |  |  | (2 | ) |  |  | (3 | ) |  |  | - |
Lapses in Statute of limitations |  |  | - |  |  |  | - |  |  |  | (6 | ) |  |  | - |
Balance as of December 31 |  | $ | 106 |  |  | $ | 107 |  |  | $ | 57 |  |  | $ | 76 |
Kodak’s policy regarding interest and/or penalties related to income tax matters is to recognize such items as a component of income tax (benefit) expense. Kodak recognized interest and penalties of approximately $0 million, $2 million, $2 million and $(60) million, in income tax (benefit) expense for the four months ended December 31, 2013, eight months ended August 31, 2013 and for the years ended December 31, 2012 and 2011, respectively. Additionally, Kodak had approximately $18 million and $16 million of interest and penalties associated with uncertain tax benefits accrued as of December 31, 2013 and 2012, respectively. If the unrecognized tax benefits were recognized, they would favorably affect the effective income tax rate in the period recognized. Kodak has classified certain income tax liabilities as current or noncurrent based on management’s estimate of when these liabilities will be settled. The current liabilities are recorded in Other current liabilities in the Consolidated Statement of Financial Position. Noncurrent income tax liabilities are recorded in Other long-term liabilities in the Consolidated Statement of Financial Position. It is reasonably possible that the liability associated with Kodak’s unrecognized tax benefits will increase or decrease within the next twelve months. These changes may be the result of settling ongoing audits or the expiration of statutes of limitations. Such changes to the unrecognized tax benefits could range from $0 to $15 million based on current estimates. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. Although management believes that adequate provision has been made for such issues, there is the possibility that the ultimate resolution of such issues could have an adverse effect on the earnings of Kodak. Conversely, if these issues are resolved favorably in the future, the related provision would be reduced, thus having a positive impact on earnings. During 2013, Kodak paid $2 million associated with the resolution of $17 million of various state and local tax claims that were agreed upon through the bankruptcy process. In addition, Kodak established a $64 million liability for unrecognized tax benefits associated with the Company’s adoption of the Plan of Reorganization. During 2012, Kodak agreed to terms with a tax authority outside of the U.S. and settled audits for calendar years 2002 through 2007. For these years, Kodak originally recorded liabilities for uncertain tax positions (“UTPs”) totaling $12 million (plus interest of approximately $4 million). The settlement resulted in a reduction in Accrued income and other taxes and the recognition of a $16 million tax benefit. During 2011, Kodak agreed to terms with the IRS and settled the federal audits for calendar years 2001 through 2005. For these years, Kodak originally recorded federal and related state liabilities for UTPs totaling $115 million (plus interest of approximately $25 million). The settlement resulted in a reduction in Accrued income and other taxes of $296 million, the recognition of a $50 million tax benefit, and a reduction in net deferred tax assets of $246 million. During 2011, Kodak agreed to terms with a tax authority outside of the U.S. and settled audits for calendar years 2001 and 2002. For these years, Kodak originally recorded liabilities for UTPs totaling $56 million (plus interest of approximately $43 million). The settlement resulted in a reduction in Accrued income and other taxes and the recognition of a $94 million tax benefit. Kodak files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. Kodak has substantially concluded all U.S. federal and state income tax matters for years through 2011. Substantially all material foreign income tax matters have been concluded for years through 2008. Kodak’s tax matters for the years 2007 through 2012 remain subject to examination by the respective foreign tax jurisdiction authorities. Net Operating Loss Rights Agreement On August 1, 2011, Kodak entered into a Net Operating Loss (“NOL”) Rights Agreement (“NOL Rights Agreement”) designed to preserve stockholder value and tax assets. The Company’s ability to use its tax attributes to offset tax on U.S. taxable income would be substantially limited if there were an "ownership change" as defined under Section 382 of the U.S. Internal Revenue Code. In general, an ownership change would occur if "5-percent shareholders," as defined under Section 382, collectively increase their ownership in the Company by more than 50 percentage points over a rolling three-year period. Upon emergence from bankruptcy Kodak’s NOL Rights Agreement was terminated under the effects of the implementation of the plan of reorganization.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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