Capital One 2007 Annual Report Download - page 113

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91
Significant components of the provision for income taxes attributable to continuing operations were as follows:
Year Ended December 31
2007 2006 2005
Current income tax provision:
Federal taxes $ 1,613,909 $ 1,188,283 $ 899,646
State taxes 82,468 67,068 30,180
International taxes 53,721 61,661 (19,558)
Total current provision (benefit) $ 1,750,098 $ 1,317,012 $ 910,268
Deferred income tax provision:
Federal taxes $ (462,193) $ 3,678 $ 45,021
State taxes (12,318) (25,395) 11,312
International taxes 2,250 (49,331) 53,254
Total deferred benefit $ (472,261) $ (71,048) $ 109,587
Total income tax provision $ 1,277,837 $ 1,245,964 $ 1,019,855
Income tax benefits of $121.9 million and $22.0 million in 2007 and 2006, respectively, were allocated directly to reduce goodwill
from acquisitions. Income tax benefit reported in shareholders equity was as follows:
Year Ended December 31
2007 2006 2005
Foreign currency translation gains (losses) $ 2,679 $ (18,033) $ (18,004)
Net unrealized securities gains (losses) 25,780 16,635 (31,706)
Net unrealized derivative (losses) gains (63,804) (6,750) 21,373
Adoption of FAS 156 6,378
Employee stock plans (53,041) (77,090) (168,426)
Employee retirement plans 17,675 1,851
Total current provision (benefit) $ (64,333) $ (83,387) $ (196,763)
The reconciliation of income tax attributable to continuing operations computed at the U.S. federal statutory tax rate to income tax
expense was:
Year Ended December 31
2007 2006 2005
Income tax at U.S. federal statutory tax rate 35.00% 35.00% 35.00%
Resolution of federal income tax issues and audits (.31) (1.94)
Recognition of foreign tax credits (1.78)
Other, including state taxes, net .11 0.87 1.05
Income taxes 33.02% 33.93% 36.05%
During 2007 and 2006, the Companys income tax expense was reduced by $12.0 million and $70.7 million, respectively, due to the
resolution of certain tax issues and audits for prior years with the Internal Revenue Service (IRS). This reduction represented the
release of previous accruals for potential audit adjustments which were subsequently settled or eliminated and further refinement of
existing tax exposures.