Capital One 2008 Annual Report Download - page 152

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Significant components of the Companys deferred tax assets and liabilities as of December 31, 2008 and 2007 were as follows:
December 31
2008
2007
Deferred tax assets:
Allowance for loan and lease losses .........................................................................................................
.
$ 1,631,883 $ 1,034,253
Unearned income ......................................................................................................................................
.
236,043
158,926
Net unrealized losses on securities and derivative instruments ................................................................
.
494,580
68,340
Employee stock plans ...............................................................................................................................
.
144,073
160,668
Rewards & sweepstakes programs............................................................................................................
.
501,817
439,254
Valuation difference of acquired loans ....................................................................................................
.
82,205
149,247
Retained liabilityManufactured Housing .............................................................................................
.
9,848
50,814
Employee benefits....................................................................................................................................
.
68,278
35,864
Securitizations..........................................................................................................................................
.
12,850

Property & equipment..............................................................................................................................
.
3,753

Foreign tax credit carryforward ...............................................................................................................
.
131,129
103,902
Other ........................................................................................................................................................
.
236,174
290,437
Subtotal....................................................................................................................................................
.
3,552,633
2,491,705
Valuation allowance ................................................................................................................................
.
(67,671) (21,301)
Total deferred tax assets...........................................................................................................................
.
3,484,962
2,470,404
Deferred tax liabilities:
Securitizations..........................................................................................................................................
.

72,539
Deferred revenue......................................................................................................................................
.
605,769
534,143
Property & equipment..............................................................................................................................
.

49,665
Prepaid expenses......................................................................................................................................
.
8,281
7,542
Leasing activities .....................................................................................................................................
.
23,919
18,632
Core deposit and other intangibles...........................................................................................................
.
367,973
423,230
Servicing assets........................................................................................................................................
.
55,035
89,258
Other foreign deferred taxes ....................................................................................................................
.
18,964
10,844
Other ........................................................................................................................................................
.
77,939
123,200
Total deferred tax liabilities .....................................................................................................................
.
1,157,880
1,329,053
Net deferred tax assets .............................................................................................................................
.
$ 2,327,082 $ 1,141,351
The Company has net operating loss carryforwards for state purposes with a tax value of $65.2 million that expire from 2009 to 2028.
The Company has a foreign net operating loss carryforward with a tax value of $40.2 million with no expiration date. The Company
has foreign tax credit carryforwards of $131.1 million that expire in 2014 through 2018.
The valuation allowance was increased by $46.4 million to adjust the tax benefit of certain state deferred tax assets and net operating
loss carryforwards to the amount the Company has determined is more likely than not to be realized.
The deferred tax liability for deferred revenue represents late fees, 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 cash advance fees and overlimit fees are reported as non- interest income.
December 31
2008
2007
Deferred revenue:
OIDlate fees ..........................................................................................................................................
.
$ 774,403
$ 845,215
OIDall other ..........................................................................................................................................
.
905,031
653,486
Gross deferred tax liability........................................................................................................................
.
$ 1,679,434 $ 1,498,701
Net federal deferred tax liability ...............................................................................................................
.
$ 605,769
$ 534,143