Berkshire Hathaway 2010 Annual Report Download - page 55

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, 2010 and 2009 are shown below (in millions).
2010 2009
Deferred tax liabilities:
Investments – unrealized appreciation and cost basis differences .................... $13,376 $11,880
Deferred charges reinsurance assumed ......................................... 1,334 1,385
Property, plant and equipment ............................................... 24,746 8,135
Other ................................................................... 5,108 4,236
44,564 25,636
Deferred tax assets:
Unpaid losses and loss adjustment expenses .................................... (1,052) (1,010)
Unearned premiums ....................................................... (508) (500)
Accrued liabilities ......................................................... (3,652) (1,643)
Derivative contract liabilities ................................................ (862) (875)
Other ................................................................... (2,932) (2,913)
(9,006) (6,941)
Net deferred tax liability ........................................................ $35,558 $18,695
We have not established deferred income taxes with respect to undistributed earnings of certain foreign subsidiaries.
Earnings expected to remain reinvested indefinitely were approximately $4.1 billion as of December 31, 2010. Upon
distribution as dividends or otherwise, such amounts would be subject to taxation in the U.S. 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).
2010 2009 2008
Federal ............................................................... $4,546 $2,833 $ 915
State ................................................................. 337 124 249
Foreign .............................................................. 724 581 814
$5,607 $3,538 $ 1,978
Current .............................................................. $3,668 $1,619 $ 3,811
Deferred ............................................................. 1,939 1,919 (1,833)
$5,607 $3,538 $ 1,978
Charges for income taxes are reconciled to hypothetical amounts computed at the U.S. federal statutory rate in the table
shown below (in millions).
2010 2009 2008
Earnings before income taxes ...................................................... $19,051 $11,552 $7,574
Hypothetical amounts applicable to above computed at the federal statutory rate .............. $ 6,668 $ 4,043 $2,651
Tax-exempt interest income ........................................................ (27) (33) (88)
Dividends received deduction ...................................................... (477) (479) (415)
State income taxes, less federal income tax benefit ...................................... 219 81 162
Foreign tax rate differences ........................................................ (154) (92) (59)
BNSF holding gain ............................................................... (342) — —
Non-taxable exchange of investment ................................................. — — (154)
Other differences, net ............................................................. (280) 18 (119)
$ 5,607 $ 3,538 $1,978
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