Freddie Mac 2014 Annual Report Download - page 204

199 Freddie Mac
more likely than not that our deferred tax assets will be realized and determined that a valuation allowance against our net
deferred tax asset was not necessary at December 31, 2014.
On February 2, 2015, the Administration submitted the full year 2016 U.S. budget to Congress. Included within the
budget is a proposal to reduce the top U.S. corporate tax rate. If enacted, a reduction in the corporate tax rate would result in a
charge representing the reduction in the realizable value of our net deferred tax asset.
In future quarters we will continue to evaluate our ability to realize the net deferred tax asset. If evidence in future
periods changes such that it is more likely than not that part or all of the net deferred tax asset will not be realized, we will
reestablish a valuation allowance at that time.
Unrecognized Tax Benefits and IRS Examinations
We have evaluated all income tax positions and determined that there are no uncertain tax positions that require reserves
as of December 31, 2014.
The IRS has examined our income tax returns for tax years 2008 through 2011. We are currently working with the IRS to
finalize the stipulation of settled issues and closing agreement for years 1998 through 2010 related to our tax accounting
method for certain hedging transactions, and expect that a final decision can be entered within the next 12 months. For
additional information, see “NOTE 17: LEGAL CONTINGENCIES.”
We have accrued gross interest receivable of $535 million and $529 million as of December 31, 2014 and 2013,
respectively, related to payments on account with the IRS. We anticipate refunds of accrued interest receivable upon final
settlement of the Statutory Notices for the 1998 to 2005 tax years.
For a discussion of our significant accounting policies related to income taxes, please see “NOTE 1: SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES."
NOTE 13: SEGMENT REPORTING
We evaluate segment performance and allocate resources based on a Segment Earnings approach, subject to the conduct
of our business under the direction of the Conservator. See “NOTE 2: CONSERVATORSHIP AND RELATED MATTERS” for
additional information about the conservatorship.
We present Segment Earnings by: (a) reclassifying certain credit guarantee-related activities and investment-related
activities between various line items on our GAAP consolidated statements of comprehensive income; and (b) allocating
certain revenues and expenses, including certain returns on assets and funding costs, and all administrative expenses to our
three reportable segments. The reclassifications and the allocations are described below.
We do not consider our assets by segment when evaluating segment performance or allocating resources. We operate our
business solely in the U.S. and its territories. Therefore, we do not generate any revenue from and do not have any long-lived
assets other than financial instruments in geographic locations outside of the U.S. and its territories.
Segments
We have three reportable segments, which are based on the type of business activities each performs — Single-family
Guarantee, Investments, and Multifamily. The chart below provides a summary of our three reportable segments and the All
Other category as of December 31, 2014. Certain immaterial changes were made to our Segment Earnings definitions in 2014.
As reflected in the chart, certain activities that are not part of a reportable segment are included in the All Other category. The
All Other category consists of material corporate level activities that are: (a) infrequent in nature; and (b) based on decisions
outside the control of the management of our reportable segments. By recording these types of activities to the All Other
category, we believe the financial results of our three reportable segments reflect the decisions and strategies that are executed
within the reportable segments and provide greater comparability across time periods.
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