INCOME TAXES INCOME TAXES

6 Months Ended

Jun. 30, 2013

Income Taxes Disclosure [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

During the first quarter of 2013, the U.S. Supreme Court denied certiorari in UCC's research tax credit case. Through the denial of certiorari, the U.S. Court of Appeals decision denying UCC's tax credit claim for supplies used in process-related research and development at its manufacturing facilities became final. As a result of this ruling, UCC reversed the uncertain tax positions related to this matter, which resulted in a decrease to "Other noncurrent obligations" and an increase to "Income taxes payable" in the consolidated balance sheets in accordance with the Tax Sharing Agreement between the Corporation and Dow. In addition, UCC recognized a tax charge of $41 million in the first quarter of 2013 included in "Provision (Credit) for income taxes" in the consolidated statements of operations. An audit settlement in the second quarter of 2013 resulted in a tax benefit of $22 million, included in "Provision (Credit) for income taxes" and various balance sheet reclassifications from noncurrent to current accruals and receivables.

Following is a reconciliation of the Corporation's unrecognized tax benefits for the periods ended June 30, 2013 and December 31, 2012:

Total Gross Unrecognized Tax Benefits	Jun 30, 2013			Dec 31, 2012
In millions
Balance at January 1	$	166		$	161
Increases related to positions taken in current year	—			8
Settlement of uncertain tax positions with tax authorities	(154		)	—
Decreases due to expiration of statutes of limitations	(2		)	(3		)
Balance at end of period	$	10		$	166

At June 30, 2013, the total amount of unrecognized tax benefits was $10 million ($166 million at December 31, 2012), of which $9 million ($158 million at December 31, 2012) would impact the effective tax rate, if recognized.

The Corporation's accrual for interest and penalties was a liability of $3 million at June 30, 2013 (receivable of $4 million at December 31, 2012). Interest and penalties associated with uncertain tax positions are recognized as components of "Provision (Credit) for income taxes," in the consolidated statements of operations and totaled a benefit of $14 million for the three months ended June 30, 2013 ($1 million charge for the three months ended June 30, 2012). During the six months ended June 30, 2013, the Corporation recognized a benefit of $14 million for the interest and penalties associated with uncertain tax positions (a charge of $1 million for the six months ended June 30, 2012).