Berkshire Hathaway 2008 Annual Report Download - page 50
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Notes to Consolidated Financial Statements (Continued)
(15) Income taxes (Continued)
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax
liabilities at December 31, 2008 and 2007 are shown below (in millions).
2008 2007
Deferred tax liabilities:
Investments – unrealized appreciation and cost basis differences ...................... $ 4,805 $13,501
Deferred charges reinsurance assumed ........................................... 1,373 1,395
Property, plant and equipment and assets held for lease .............................. 7,004 4,890
Other ..................................................................... 4,024 2,743
17,206 22,529
Deferred tax assets:
Unpaid losses and loss adjustment expenses ...................................... (896) (756)
Unearned premiums ......................................................... (495) (425)
Accrued liabilities ........................................................... (1,698) (1,259)
Derivative contract liabilities .................................................. (2,144) —
Other ..................................................................... (2,657) (1,933)
(7,890) (4,373)
Net deferred tax liability ........................................................ $ 9,316 $18,156
Deferred income taxes have not been established with respect to undistributed earnings of certain foreign subsidiaries.
Earnings expected to remain reinvested indefinitely were approximately $3,430 million as of December 31, 2008. Upon
distribution as dividends or otherwise, such amounts would be subject to taxation in the United States as well as foreign
countries. However, U.S. income tax liabilities could be offset, in whole or in part, by tax credits allowable from taxes paid to
foreign jurisdictions. Determination of the potential net tax due is impracticable due to the complexities of hypothetical
calculations involving uncertain timing and amounts of taxable income and the effects of multiple taxing jurisdictions.
The Consolidated Statements of Earnings reflect charges for income taxes as shown below (in millions).
2008 2007 2006
Federal ............................................................... $ 915 $5,740 $4,752
State ................................................................. 249 234 153
Foreign .............................................................. 814 620 600
$ 1,978 $6,594 $5,505
Current .............................................................. $3,811 $5,708 $5,030
Deferred ............................................................. (1,833) 886 475
$ 1,978 $6,594 $5,505
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