Capital One 2014 Annual Report Download - page 249

The following table presents significant components of the Company’s deferred tax assets and liabilities at
December 31, 2014 and 2013:
Table 17.4: Significant Components of Deferred Tax Assets and Liabilities
December 31, December 31,
(Dollars in millions) 2014 2013
Deferred tax assets:
Allowance for loan and lease losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,574 $ 1,583
Rewards programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 993 855
Security and loan valuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 928 1,296
Compensation and employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 304
Representation and warranty reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 444
Net operating loss and tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . 163 248
Goodwill and intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 0
Unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 87
Net unrealized losses on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 167
Other foreign deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314 259
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,838 5,250
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (148) (139)
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,690 5,111
Deferred tax liabilities:
Original issue discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 875 893
Fixed assets and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208 173
Goodwill and intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 010
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275 303
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,358 1,379
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,332 $ 3,732
As of the end of December 31, 2014, we had federal net operating loss carry-forwards and losses of $18 million
attributable to ING Direct that expire from 2018 to 2032. Under IRS rules, the Company’s ability to utilize these
losses against future income is limited to $2 million per year. We have state operating loss carryforwards with a net
tax value of $157 million that expire from 2015 to 2033.
The valuation allowance increased by $9 million to adjust the tax benefit of certain state deferred tax assets and net
operating loss carryforwards to the amount we have determined is more likely than not to be realized.
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, and disclosure. We recognize accrued interest
and penalties related to income taxes as a component of income tax expense. We recognized a $3 million benefit,
$13 million benefit and $3 million expense for net interest and penalties for 2014, 2013 and 2012, respectively.
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CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Capital One Financial Corporation (COF)