Capital One 2007 Annual Report Download - page 114

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Significant components of the Companys deferred tax assets and liabilities as of December 31, 2007 and 2006 were as follows:
December 31
2007 2006
Deferred tax assets:
Allowance for loan losses $ 1,034,253 $ 721,241
Unearned income 158,926
113,261
Net unrealized losses on securities and derivative instruments 68,340
67,009
Employee stock plans 160,668
122,029
Rewards & sweepstakes programs 439,254
165,791
Valuation difference of acquired loans 149,247
175,291
Retained liabilityManufactured Housing 50,814
30,461
Employee benefits 35,864
56,720
Foreign tax credit carryforward 103,902
12,103
Other 290,437
250,315
Subtotal 2,491,705
1,714,221
Valuation allowance (21,301) (14,621)
Total deferred tax assets 2,470,404
1,699,600
Deferred tax liabilities:
Securitizations 72,539
75,540
Deferred revenue 534,143
663,821
Property & equipment 49,665
72,777
Prepaid expenses 7,542
55,078
Leasing activities 18,632
16,595
Core deposit and other intangibles 423,230
543,000
Servicing assets 89,258
91,429
Other foreign deferred taxes 10,844
14,441
Other 123,200
159,914
Total deferred tax liabilities 1,329,053
1,692,595
Net deferred tax assets (liabilities) $ 1,141,351 $ 7,005
(1) Prior period amounts have been reclassified to conform with current period presentation.
Included in Other deferred tax assets at December 31, 2007, the Company has a $3.7 million net operating loss carryforward for U.S.
federal income taxes purposes with a tax value of $1.2 million that expires in 2020. The Company has net operating loss
carryforwards for state purposes with a tax value of $22.5 million that expire from 2008 to 2027. The Company has foreign tax credit
carryforwards of $103.9 million that expire in 2014 through 2017.
During 2007, the valuation allowance for certain tax credit carryforwards decreased by $7.9 million as a result of a determination that
the Company would have sufficient foreign tax credit limitation in future years. The state valuation allowance was increased by $14.5
million, primarily related to state net operating loss carryforwards acquired through the purchase of North Fork Bancorporation, Inc.
for which subsequently recognized tax benefits will reduce goodwill.
The deferred tax liability for deferred revenue represents late fees, interchange, cash advance fees and overlimit fees. These items are
generally treated as original issue discount (OID) for tax purposes and recognized over the life of the related credit card receivables.
These items are recognized in the income statement as income in the year earned. For income statement purposes, late fees are
reported as interest income, and interchange, cash advance fees and overlimit fees are reported as non- interest income.
December 31
2007 2006
Deferred revenue:
OIDlate fees $ 845,215
$ 877,759
OIDall other 653,486
986,681
Gross deferred tax liability $ 1,498,701 $ 1,864,440
Net federal deferred tax liability $ 534,143 $ 663,821
(1) Prior period amounts have been reclassified to conform with current period presentation.
In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB
Statement No. 109 (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with SFAS