Ally Bank 2011 Annual Report Download - page 197

Table of Contents
Notes to Consolidated Financial Statements
Ally Financial Inc. • Form 10−K
The significant components of income tax expense from continuing operations were as follows.
Year ended December 31, ($ in millions) 2011 2010 2009
Current income tax expense
U.S. federal $ 18 $ 12 $ 146
Foreign 353 470 173
State and local 12 58 14
Total current expense 383 540 333
Deferred income tax benefit
U.S. federal — (6) (109)
Foreign (204) (374) (32)
State and local — (7) (118)
Total deferred benefit (204) (387) (259)
Total income tax expense from continuing operations $ 179 $ 153 $ 74
A reconciliation of the provision (benefit) for income taxes with the amounts at the statutory U.S. federal income tax rate is shown in the following
table.
Year ended December 31, ($ in millions) 2011 2010 2009
Statutory U.S. federal tax expense (benefit) $ 23 $ 399 $ (2,418)
Change in tax resulting from
Effect of valuation allowance change 215 (132) 2,118
Taxes on unremitted earnings of subsidiaries 24 (71) (25)
State and local income taxes, net of federal income tax benefit 7 2 (285)
Foreign tax differential (47) (75) 50
Equity−method investments (28) (20) (9)
Changes in unrecognized tax benefits (18) 38 8
Tax−exempt income (2) (6) (17)
Foreign capital loss — (1) (1,044)
Change in tax status — — 1,244
LLC results not subject to federal or state income taxes — — 544
Other, net 5 19 (92)
Tax expense $ 179 $ 153 $ 74
Worldwide tax expense does not naturally correspond with worldwide pretax income because we apply a valuation allowance to the majority of our
domestic and certain foreign net deferred tax assets. For 2011, consolidated tax expense of $179 million is largely driven by the results of our foreign
operations that are not subject to a valuation allowance, by certain U.S. taxes that are not eligible for offset by U.S. net operating losses and by U.S. state
income taxes where profitable subsidiaries are required to file separately from the consolidated group.
At December 31, 2011, we had U.S. federal and state net operating loss carryforwards and capital loss carryforwards of $3.2 billion and $1.9 billion,
respectively. The federal net operating loss carryforwards expire in the years 2025–2031. The capital loss carryforwards expire in the years 2013–2015. The
corresponding expiration periods for the state operating and capital loss carryforwards are 2014–2031 and 2013–2015, respectively. Additionally, foreign
tax credit carryforwards of $139 million are available as of December 31, 2011, in the United States and expire in the years 2012–2021.
Also, at December 31, 2011, we had foreign net operating loss carryforwards of $1.2 billion. The foreign operating loss carryforwards of $917 million
in Belgium, Brazil, Denmark, Italy, Sweden, and the UK have an indefinite carryforward period. The Canadian loss carryforwards of $169 million expire in
the years 2026–2031. The remaining net operating loss carryforwards of $104 million expire in the years 2012–2025.
We assessed the available positive and negative evidence to estimate if sufficient future taxable income of the appropriate character will be generated
to utilize the existing deferred tax assets. A significant piece of objective negative evidence evaluated for certain tax jurisdictions that have legal entities
with net deferred tax assets was the cumulative loss incurred over the three−year period ended December 31, 2011 and the absence of any available
tax−planning strategies. This objective negative evidence outweighed the positive evidence, which was more
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