Ally Bank 2014 Annual Report Download - page 148

Table of Contents
Notes to Consolidated Financial Statements
Ally Financial Inc. • Form 10-K
136
Our income tax expense (benefit) from continuing operations has not naturally corresponded with our income (loss) from continuing
operations before income tax for the years ended December 31, 2014, 2013, and 2012, given we had U.S. and foreign valuation allowance
movements during those years. For 2014, consolidated income tax expense from continuing operations is largely driven by tax attributable to
pretax earnings for the year, offset by tax benefits recognized from the release of a portion of our valuation allowance on capital loss
carryforwards utilized against current year capital gains, a reduction in the liability for unrecognized tax benefits resulting from the
completion of the U.S. federal audit related to our 2009 tax year, and the reinstatement of the active financing exception included in the Tax
Increase Prevention Act of 2014. For 2013, consolidated income tax benefit from continuing operations was largely driven by a release of a
portion of our valuation allowance related to the measurement of foreign tax credit carryforwards anticipated to be utilized in the future and
release of our valuation allowance on capital loss carryforwards. Additional benefit was also recognized from a tax law enactment that
retroactively reinstated the active financing exception. For 2012, consolidated income tax benefit from continuing operations was largely
driven by a release of a portion of our U.S. valuation allowance on the basis of management's reassessment of the amount of its deferred tax
assets that were more likely than not to be realized.
As of each reporting date, we consider existing evidence, both positive and negative, that could impact our view with regard to future
realization of deferred tax assets. We continue to believe it is more likely than not that the benefit for certain capital loss, foreign tax credit,
and state net operating loss carryforwards will not be realized. In recognition of this risk, we continue to provide a partial valuation allowance
on the deferred tax assets relating to these carryforwards.
The sale of our joint venture in China, which was completed in January 2015, will result in additional capital gains that will allow us to
realize additional capital loss carryforwards. Any resulting reversal of valuation allowance on these deferred tax assets will be recognized as
income tax benefit upon such reversal.
The significant components of deferred tax assets and liabilities are reflected in the following table.
December 31, ($ in millions) 2014 2013
Deferred tax assets
Tax credit carryforwards $ 1,911 $ 1,874
Tax loss carryforwards 1,158 1,624
Mark-to-market on consumer finance receivables and loans 349 721
State and local taxes 227 297
Provision for loan losses 171 257
Unearned insurance premiums 141 140
Hedging transactions 139 177
Basis difference in subsidiaries 17 —
ResCap settlement accrual —53
Other 193 247
Gross deferred tax assets 4,306 5,390
Valuation allowance (734) (1,154)
Deferred tax assets, net of valuation allowance 3,572 4,236
Deferred tax liabilities
Lease transactions 1,148 1,527
Deferred acquisition costs 378 351
Debt transactions 161 191
Sales of finance receivables and loans 16 26
Basis difference in subsidiaries —55
Other 62 46
Gross deferred tax liabilities 1,765 2,196
Net deferred tax assets (a) $ 1,807 $ 2,040
(a) Total net deferred tax assets includes $1,812 million of net deferred tax assets included in other assets on our Consolidated Balance Sheet for tax
jurisdictions in a total net deferred tax asset position and $5 million included in accrued expenses and other liabilities on our Consolidated Balance Sheet
for tax jurisdictions in a total net deferred tax liability position at December 31, 2014.