Citibank 2012 Annual Report Download - page 205

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10. INCOME TAXES
In millions of dollars 2012 2011 2010
Current
Federal $ (71) $ (144) $ (249)
Foreign 3,889 3,498 3,239
State 300 241 207
Total current income taxes $ 4,118 $3,595 $ 3,197
Deferred
Federal $(4,943) $ (793) $ (933)
Foreign 900 628 279
State (48) 91 (310)
Total deferred income taxes $(4,091) $ (74) $ (964)
Provision (benefit) for income tax on
continuing operations before
noncontrolling interests (1) $ 27 $3,521 $ 2,233
Provision (benefit) for income taxes on
discontinued operations (71) 66 (562)
Provision (benefit) for income taxes on
cumulative effect of accounting changes (58) — (4,978)
Income tax expense (benefit) reported
in stockholders’ equity related to:
Foreign currency translation (709) (609) (739)
Securities available-for-sale 369 1,495 1,167
Employee stock plans 265 297 600
Cash flow hedges 311 (92) 325
Pension liability adjustments (390) (235) (434)
Income taxes before noncontrolling interests $ (256) $4,443 $(2,388)
(1) Includes the effect of securities transactions and OTTI losses resulting in a provision (benefit) of
$1,138 million and $(1,740) million in 2012, $699 million and $(789) million in 2011 and $844
million and $(494) million in 2010, respectively.
The reconciliation of the federal statutory income tax rate to the
Company’s effective income tax rate applicable to income from continuing
operations (before noncontrolling interests and the cumulative effect of
accounting changes) for the years ended December 31 was as follows:
2012 2011 2010
Federal statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal benefit 3.0 1.5 (0.1)
Foreign income tax rate differential (4.8) (8.6) (10.0)
Audit settlements (1) (11.7) — (0.5)
Effect of tax law changes (2) (0.1) 2.0 (0.1)
Basis difference in affiliates (9.1) — —
Tax advantaged investments (12.2) (6.0) (6.7)
Other, net 0.2 0.2 (0.7)
Effective income tax rate 0.3% 24.1% 16.9%
(1) For 2012 and 2010, relates to the conclusion of the audit of various issues in the Company’s
2006–2008 and 2003–2005 U.S. federal tax audits, respectively. 2012 also includes an amount
related to the conclusion of a New York City tax audit for 2006–2008.
(2) For 2011, includes the results of the Japan tax rate change which resulted in a $300 million
DTA charge.
Deferred income taxes at December 31 related to the following:
In millions of dollars 2012 2011
Deferred tax assets
Credit loss deduction $10,947 $12,481
Deferred compensation and employee benefits 4,890 4,936
Restructuring and settlement reserves 1,645 1,331
Unremitted foreign earnings 5,114 7,362
Investment and loan basis differences 3,878 2,358
Cash flow hedges 1,361 1,673
Tax credit and net operating loss carry-forwards 28,087 22,764
Other deferred tax assets 2,651 2,127
Gross deferred tax assets $58,573 $55,032
Valuation allowance ——
Deferred tax assets after valuation allowance $58,573 $55,032
Deferred tax liabilities
Deferred policy acquisition costs
and value of insurance in force $ (495) $ (591)
Fixed assets and leases (623) (1,361)
Intangibles (1,517) (710)
Debt valuation adjustment on Citi liabilities (73) (533)
Other deferred tax liabilities (543) (307)
Gross deferred tax liabilities $ (3,251) $ (3,502)
Net deferred tax asset $55,322 $51,530