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<div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>Note 16. Income Taxes</b> </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left"> The total amount of unrecognized tax benefits as of June 30, 2010, was $998 million, of which $75 million would affect the Company's effective tax rate if recognized. The amount of unrecognized tax benefits includes approximately $499 million related to the February 1998 disposition of ITT World Directories which the Company strongly believes was completed on a tax deferred basis. In 2002, the IRS proposed an adjustment to tax the gain on disposition in 1998, and the issue has progressed to litigation in United States Tax Court. In January 2009, the Company and the IRS reached an agreement in principle to settle the litigation pertaining to the tax treatment of this transaction. In 2010, the Company expects to finalize the details of the agreement and obtain a refund of approximately $200 million for previously paid tax. As a result, the Company expects to decrease its unrecognized tax benefits by approximately $499 million within the next 12 months. It is reasonably possible that zero to substantially all of the Company's other remaining unrecognized tax benefits will reverse within the next twelve months. </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left"> The Company recognizes interest and penalties related to unrecognized tax benefits through income tax expense. As of June 30, 2010, the Company had $239 million accrued for the payment of interest and no accrued penalties. </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left"> The Company is subject to taxation in the U.S. federal jurisdiction, as well as various state and foreign jurisdictions. As of June 30, 2010, the Company is no longer subject to examination by U.S. federal taxing authorities for years prior to 2004 and to examination by any U.S. state taxing authority prior to 1998. All subsequent periods remain eligible for examination. In the significant foreign jurisdictions in which the Company operates, the Company is no longer subject to examination by the relevant taxing authorities for any years prior to 2001. </div></div> </div>Note 16. Income Taxes
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-Name Regulation S-X (SX)
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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-Paragraph 136, 172
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
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