consolidated statement of financial condition - Barclays Capital

The Company is required to assess the likelihood thatdeferred tax assets will be realized using a more-likelythan-notcriteria. To the extent this criteria is not met,the Company is required to establish a valuationallowance against the deferred tax assets. No valuationallowance is recorded at December 31, 2010 becausethe Company believes the net deferred tax assets willmore-likely-than-not be realized.The Company’s unrecognized tax benefits, includinginterest of $18 million, are recorded in the ConsolidatedStatement of Financial Condition as current incometaxes payable, included in Other liabilities. The Companyhas not recorded any amounts for penalties related to itsunrecognized tax benefits. In connection with theLehman acquisition, and due to the complexitiesinvolved with the transaction, there are potentiallymaterial tax uncertainties which could have a significantimpact in the Company's unrecognized tax benefits.If any tax return examination by federal, state or localtax authorities is concluded during the next twelvemonths, it is possible that the amount of accrued liabilityfor uncertain tax positions could change. It is notpossible to estimate the amount of any such change atthis time. It is possible that any change in uncertain taxpositions could have a significant impact on theCompany’s Consolidated Statement of FinancialCondition.BGUS’s federal corporate income tax returns for theyears 2006 and after remain subject to examination. TheCompany and its Subsidiary filed combined and unitarystate and local returns with affiliates, as well as certainseparate state and local filings. The most significantstate and local filings are subject to examination for theyears 2006 and after.9. Short-Term BorrowingsAt December 31, 2010, short-term borrowings consist ofuncollateralized loans payable to affiliates and thirdparties of $143 million and $19 million, respectively andbank overdrafts payable primarily to third parties of$56 million. The loans from affiliates bear interest atrates based on the London Interbank Offered Rate(“LIBOR”). The carrying value of these borrowingsapproximates fair value due to the short-term nature ofthe obligation.27