Ford 2012 Annual Report Download - page 140

138 Ford Motor Company | 2012 Annual Report
FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 24. INCOME TAXES
In accordance with GAAP, we have elected to recognize accrued interest related to unrecognized tax benefits and tax-
related penalties in the Provision for/(Benefit from) income taxes on our consolidated income statement.
Valuation of Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary
differences that exist between the financial statement carrying value of assets and liabilities and their respective tax
bases, and operating loss and tax credit carryforwards on a taxing jurisdiction basis. We measure deferred tax assets
and liabilities using enacted tax rates that will apply in the years in which we expect the temporary differences to be
recovered or paid.
Our accounting for deferred tax consequences represents our best estimate of the likely future tax consequences of
events that have been recognized in our financial statements or tax returns and their future probability. In assessing the
need for a valuation allowance, we consider both positive and negative evidence related to the likelihood of realization of
the deferred tax assets. If, based on the weight of available evidence, it is more likely than not that the deferred tax
assets will not be realized, we record a valuation allowance.
Components of Income Taxes
Components of income taxes excluding discontinued operations, cumulative effects of changes in accounting
principles, other comprehensive income, and equity in net results of affiliated companies accounted for after-tax, are as
follows:
2012 2011 2010
Income before income taxes, excluding equity in net results of affiliated companies
accounted for after-tax (in millions)
U.S. $ 6,639 $ 6,043 $ 4,057
Non-U.S. 493 2,138 2,554
Total $ 7,132 $ 8,181 $ 6,611
Provision for/(Benefit from) income taxes (in millions)
Current
Federal $ 4 $ (4) $ (69)
Non-U.S. 270 298 289
State and local 3 (24) (5)
Total current 277 270 215
Deferred
Federal 2,076 (9,785) —
Non-U.S. (126) (1,590) 292
State and local (171) (436) 85
Total deferred 1,779 (11,811) 377
Total $ 2,056 $ (11,541) $ 592
Reconciliation of effective tax rate
U.S. statutory rate 35.0%35.0 % 35.0%
Non-U.S. tax rates under U.S. rates (1.6) (1.5) (0.1)
State and local income taxes 0.2 1.1 1.5
General business credits 0.3 (1.9) (1.8)
Dispositions and restructurings (1.7) 6.8 (9.5)
U.S. tax on non-U.S. earnings (1.0) (0.8) 0.1
Prior year settlements and claims (1.8) (0.2) (10.0)
Tax-related interest — (0.9) (0.7)
Tax-exempt income (3.9) (3.9) (4.7)
Other 1.7 (2.5) 0.2
Valuation allowances 1.6 (172.3) (1.0)
Effective rate 28.8% (141.1)% 9.0%