Capital One 2013 Annual Report Download - page 248

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Table 17.5: Deferred Tax Liability Related to Original Issue Discount
December 31,
(Dollars in millions) 2013 2012
Original Issue discount:
OID—late fees ................................................................ $1,024 $1,225
OID—all other ................................................................ 1,402 1,377
Gross original issue discount .................................................... 2,426 2,602
Net deferred tax liability ........................................................ $ 893 $ 957
The accounting guidance for income taxes clarifies the accounting for uncertainty in income taxes, and prescribes
a recognition threshold and measurement attribute for the financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. The guidance also provides rules on derecognition,
classification, interest and penalties, accounting in interim periods, disclosure, and transition.
We recognize accrued interest and penalties related to income taxes as a component of income tax expense. We
recognized a $13 million benefit, $3 million expense and $39 million benefit of net interest and penalties for
2013, 2012 and 2011, respectively. The accrued balance of interest and penalties related to unrecognized tax
benefits is presented in the table below.
Table 17.6: Reconciliation of the Change in Unrecognized Tax Benefits
(Dollars in millions)
Gross
Unrecognized
Tax Benefits
Accrued
Interest and
Penalties
Gross Tax,
Interest and
Penalties
Balance as of January 1, 2012 ................................... $213 $60 $273
Additions for tax positions related to the current year ................ 0 0 0
Additions for tax positions related to prior years .................... 51 9 60
Reductions for tax positions related to prior years due to IRS and other
settlements ................................................ (56) (15) (71)
Additions for tax positions related to acquired entities in prior years,
offset to goodwill .......................................... 0 0 0
Other reductions for tax positions related to prior years ............... 0 0 0
Balance as of December 31, 2012 ................................ $ 208 $ 54 $ 262
Additions for tax positions related to the current year ................ —— —
Additions for tax positions related to prior years .................... 15 7 22
Reductions for tax positions related to prior years due to IRS and other
settlements ................................................ (109) (22) (131)
Additions for tax positions related to acquired entities in prior years,
offset to goodwill .......................................... 00 0
Other reductions for tax positions related to prior years ............... 00 0
Balance as of December 31, 2013 ................................ $ 114 $ 39 $ 153
Portion of balance at December 31, 2013 that, if recognized, would
impact the effective income tax rate ............................ $ 78 $ 25 $ 103
We are subject to examination by the IRS and other tax authorities in certain countries and states in which we
have significant business operations. The tax years subject to examination vary by jurisdiction. During 2013, the
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