AbbVie 2012 Annual Report Download - page 96
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Note 11 Income Taxes
Earnings Before Income Taxes
years ended December 31 (in millions) 2012 2011 2010
Domestic $ 625 $ 626 $ (191)
Foreign 5,100 3,042 5,027
Total earnings before income taxes $5,725 $3,668 $4,836
Income Taxes
years ended December 31 (in millions) 2012 2011 2010
Current
Domestic $ 94 $ 177 $ 987
Foreign 252 390 408
Total current taxes $346 $ 567 $1,395
Deferred
Domestic $ 89 $(198) $ (624)
Foreign 15 (134) (113)
Total deferred taxes 104 (332) (737)
Total income taxes $450 $ 235 $ 658
Effective Tax Rate Reconciliation
years ended December 31 (in millions) 2012 2011 2010
Statutory tax rate 35.0% 35.0% 35.0%
Benefit of lower tax rates and tax exemptions, primarily in Puerto Rico (23.5) (25.4) (22.5)
Resolution of certain tax positions pertaining to prior years (3.4) (11.2) —
Effect of non-deductible litigation loss accrual 0.6 12.9 —
Puerto Rico excise tax credit (1.2) (3.2) —
State taxes, net of federal benefit 0.1 0.3 0.2
All other, net 0.3 (2.0) 0.9
Effective tax rate 7.9% 6.4% 13.6%
Income taxes in 2012 and 2011 included the recognition of tax benefits totaling approximately
$195 million and $410 million, respectively, as a result of favorable resolutions of various tax positions
pertaining to prior years. Income taxes in 2011 also reflected the non-deductibility of a litigation
reserve. Excluding these discrete items, the effective tax rates were less than the statutory U.S. federal
income tax rate of 35 percent principally due to the benefit of lower statutory tax rates and tax
exemptions in Puerto Rico and other foreign taxing jurisdictions, which reduced the tax rates by 23.5,
25.4 and 22.5 percentage points in 2012, 2011 and 2010, respectively.
In 2010, Puerto Rico enacted legislation that assesses an excise tax beginning in 2011 on certain
products manufactured in Puerto Rico. The tax is levied on gross inventory purchases from entities in
Puerto Rico and is included in cost of products sold in the combined statements of earnings. The
majority of the tax is creditable for U.S. income tax purposes. In 2012 and 2011, the excise tax totaled
approximately $180 million and $105 million, respectively.
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