remitted to the u.s . due to foreign tax credits and exclusions that may become available at the time of remittance . at december 31 , 2010 , aon had domestic federal operating loss carryforwards of $ 56 million that will expire at various dates from 2011 to 2024 , state operating loss carryforwards of $ 610 million that will expire at various dates from 2011 to 2031 , and foreign operating and capital loss carryforwards of $ 720 million and $ 251 million , respectively , nearly all of which are subject to indefinite carryforward . unrecognized tax provisions the following is a reconciliation of the company 2019s beginning and ending amount of unrecognized tax benefits ( in millions ) : .
as of december 31 , 2010 , $ 85 million of unrecognized tax benefits would impact the effective tax rate if recognized . aon does not expect the unrecognized tax positions to change significantly over the next twelve months , except for a potential reduction of unrecognized tax benefits in the range of $ 10-$ 15 million relating to anticipated audit settlements . the company recognizes penalties and interest related to unrecognized income tax benefits in its provision for income taxes . aon accrued potential penalties of less than $ 1 million during each of 2010 , 2009 and 2008 . aon accrued interest of less than $ 1 million in 2010 , $ 2 million during 2009 and less than $ 1 million in 2008 . aon has recorded a liability for penalties of $ 5 million and for interest of $ 18 million for both december 31 , 2010 and 2009 . aon and its subsidiaries file income tax returns in the u.s . federal jurisdiction as well as various state and international jurisdictions . aon has substantially concluded all u.s . federal income tax matters for years through 2006 . material u.s . state and local income tax jurisdiction examinations have been concluded for years through 2002 . aon has concluded income tax examinations in its primary international jurisdictions through 2004. .
2010 2009
Balance at January 1 $77 $86
Additions based on tax positions related to the current year 7 2
Additions for tax positions of prior years 4 5
Reductions for tax positions of prior years (7) (11)
Settlements (1) (10)
Lapse of statute of limitations (5) (3)
Acquisitions 26 6
Foreign currency translation (1) 2
Balance at December 31 $100 $77
2010 2009
balance at january 1 $ 77 $ 86
additions based on tax positions related to the current year 7 2
additions for tax positions of prior years 4 5
reductions for tax positions of prior years -7 ( 7 ) -11 ( 11 )
settlements -1 ( 1 ) -10 ( 10 )
lapse of statute of limitations -5 ( 5 ) -3 ( 3 )
acquisitions 26 6
foreign currency translation -1 ( 1 ) 2
balance at december 31 $ 100 $ 77