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Income Taxes
6 Months Ended
Jun. 30, 2013
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The effective tax rate for the three months ended June 30, 2013 and 2012 was 49.6% and 33.0%, respectively. The effective tax rate for the six months ended June 30, 2013 and 2012 was 32.0% and 21.3%, respectively. The effective tax rate for the three and six months ended June 30, 2013 includes tax benefits of $7 million related to one-time tax planning initiatives and $4 million from the adjustment of non-U.S. tax accounts from prior periods offset by the reduced tax benefits associated with the goodwill impairment charge. The effective tax rate for the 2013 year-to-date period also includes a benefit of $4 million from the retroactive effect of 2013 U.S. tax legislation. The effective tax rate for the six months ended June 30, 2012 includes tax benefits of $17 million from the sale of non-U.S. leveraged lease assets and $22 million from the resolution of tax examinations.
As is the case with other large corporations, our tax returns are examined each year by tax authorities in the U.S., other countries and local jurisdictions in which we have operations. We expect the examination of our 2009 through 2011 tax returns by the Internal Revenue Service (IRS) to be completed within the next 12 months. We regularly assess the likelihood of tax adjustments in each of the tax jurisdictions in which we do business and account for the related financial statement implications. We believe we have established tax reserves that are appropriate given the possibility of tax adjustments. However, determining the appropriate level of tax reserves requires judgment regarding the uncertain application of tax law and the possibility of tax adjustments. Future changes in tax reserve requirements could have a material impact, positive or negative, on our results of operations, financial position and cash flows. It is reasonably possible that the amount of our unrecognized tax benefits will decrease in the next 12 months, and we expect this change could be up to twenty percent of our unrecognized tax benefits.
On August 27, 2012, the United States Court of Appeals for the Third Circuit overturned a prior Tax Court decision and ruled in favor of the IRS and adverse to the Historic Boardwalk Hall LLC, a partnership in which we had made an investment in the year 2000. During the quarter, the U.S. Supreme Court decided not to hear the partnership's appeal of the Third Circuit decision, and the case has since been sent back to the Tax Court for additional proceedings. Based on our entitlement to indemnification under the partnership agreement, we do not expect this matter to have a material effect on our results of operations. However, the potential for a difference in the timing of payments which may be due to taxing authorities and the timing of receipts due to us under the partnership agreement may cause fluctuations in our cash flows in future periods.