CVS 2014 Annual Report Download - page 81

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79
2014 Annual Report
The following table is a summary of the significant components of the Company’s deferred tax assets and liabilities
as of December 31:
IN MILLIONS 2014 2013
Deferred tax assets:
Lease and rents
$ 396
$ 344
Employee benefits
311
213
Allowance for doubtful accounts
164
172
Retirement benefits
80
79
Net operating losses
74
10
Depreciation
—
192
Deferred income
261
220
Other
297
378
Valuation allowance
(5)
(3)
Total deferred tax assets
1,578
1,605
Deferred tax liabilities:
Inventories
(18)
(69)
Depreciation and amortization
(4,572)
(4,512)
Total deferred tax liabilities
(4,590)
(4,581)
Net deferred tax liabilities
$ (3,012)
$ (2,976)
Net deferred tax assets (liabilities) are presented on the consolidated balance sheets as follows:
IN MILLIONS
2014 2013
Deferred tax assets—current
$ 985
$ 902
Deferred tax assets—noncurrent (included in other assets)
39
23
Deferred tax liabilities—noncurrent
(4,036)
(3,901)
Net deferred tax liabilities
$ (3,012)
$ (2,976)
The Company believes that it is more likely than not the deferred tax assets will be realized during future periods.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
IN MILLIONS
2014 2013 2012
Beginning balance
$ 117
$ 80 $ 38
Additions based on tax positions related to the current year
32
19 15
Additions based on tax positions related to prior years
70
37 42
Reductions for tax positions of prior years
(15)
(1) (2)
Expiration of statutes of limitation
(15)
(17) (12)
Settlements
(1)
(1) (1)
Ending balance
$ 188
$ 117 $ 80
The Company and most of its subsidiaries are subject to U.S. federal income tax as well as income tax of numerous
state and local jurisdictions. The Internal Revenue Service (“IRS”) is currently examining the Company’s 2012, 2013
and 2014 consolidated U.S. federal income tax returns under its Compliance Assurance Process (“CAP”) program.
The CAP program is a voluntary program under which participating taxpayers work collaboratively with the IRS to
identify and resolve potential tax issues through open, cooperative and transparent interaction prior to the filing of
their federal income tax return.