INCOME TAXES

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

Income Taxes [Text Block]

Note 6. INCOME TAXES

The effective tax benefit rate was43.4%on the pretax loss during the third quarter of 2012compared to an effective tax rate of26.0%on pretax earnings during the third quarter of 2011. The effective income tax rates were 13.7%and 25.2%during thenine months ended September 30, 2012 and 2011, respectively. The overall tax benefit rate of 43.4% attributed to the pretax loss in the current quarter was due to the mix of earnings in low tax jurisdictions and pretax loss in the higher U.S. tax jurisdiction resulting from a $1,830million intangible asset impairment charge. The impact of the impairment charge reduced the effective tax rate by 11 percentage points during the nine months ended September 30, 2012. The effective tax rate is typically lower than the U.S. statutory rate of 35% primarily attributable to undistributed earnings of certain foreign subsidiaries that have been considered or are expected to be indefinitely reinvested offshore.Ifthese earnings are repatriated to the U.S. in the future, or if it was determined that such earnings are to be remitted in the foreseeable future, additional tax provisions would be required. Reforms to U.S. tax laws related to foreign earnings have been proposed and if adopted, may increase taxes,which could reduce the results of operations and cash flows.

The decrease in the effective tax rate in the nine months endedSeptember 30, 2012 was due to:

• Favorable earnings mix between high and low tax jurisdictions primarily attributed to the $1,830 million IPRD impairment charge in the U.S.

Partially offset by:

• Lower tax benefits from contingent tax matters ($30 million charge in 2012 and $75 million benefit in 2011);
• An unfavorable impact on the current year rate from the research and development tax credit, which was not extended as of September 30, 2012; and
• Changes in prior period estimates upon finalizing U.S. tax returns resulting in a $54 million benefit in 2011.

BMS is currently under examination by a number of tax authorities which have proposed adjustments to tax for issues such as transfer pricing, certain tax credits and the deductibility of certain expenses. BMS estimates that it is reasonably possible that the total amount of unrecognized tax benefits at September 30, 2012could decrease in the range of approximately $20 million to $50 million in the next twelve months as a result of the settlement of certain tax audits and other events resulting in the payment of additional taxes, the adjustment of certain deferred taxes and/or the recognition of tax benefits. It is also reasonably possible that new issues will be raised by tax authorities which may require adjustments to the amount of unrecognized tax benefits; however, an estimate of such adjustments cannot reasonably be made at this time. BMS believes that it has adequately provided for all open tax years by tax jurisdiction.