Goldman Sachs 2012 Annual Report Download - page 195

Notes to Consolidated Financial Statements
Deferred Income Taxes
Deferred income taxes reflect the net tax effects of
temporary differences between the financial reporting and
tax bases of assets and liabilities. These temporary
differences result in taxable or deductible amounts in future
years and are measured using the tax rates and laws that
will be in effect when such differences are expected to
reverse. Valuation allowances are established to reduce
deferred tax assets to the amount that more likely than not
will be realized. Tax assets and liabilities are presented as a
component of “Other assets” and “Other liabilities and
accrued expenses,” respectively.
The table below presents the significant components of
deferred tax assets and liabilities.
As of December
in millions 2012 2011
Deferred tax assets
Compensation and benefits $2,447 $3,126
Unrealized losses 1,477 849
ASC 740 asset related to unrecognized tax benefits 685 569
Non-U.S. operations 965 662
Foreign tax credits —12
Net operating losses 222 213
Occupancy-related 119 110
Other comprehensive income-related 114 168
Other, net 435 581
6,464 6,290
Valuation allowance 1(168) (65)
Total deferred tax assets 2$6,296 $6,225
Depreciation and amortization 1,230 1,959
Other comprehensive income-related 85 36
Total deferred tax liabilities 2$1,315 $1,995
1. Relates primarily to the ability to utilize losses in various tax jurisdictions.
2. Before netting within tax jurisdictions.
The firm has recorded deferred tax assets of $222 million
and $213 million as of December 2012 and
December 2011, respectively, in connection with U.S.
federal, state and local and foreign net operating loss
carryforwards. The firm also recorded a valuation
allowance of $60 million and $59 million as of
December 2012 and December 2011, respectively, related
to these net operating loss carryforwards. As of
December 2012, the U.S. federal and foreign net operating
loss carryforwards were $39 million and $640 million,
respectively. If not utilized, the U.S. federal net operating
loss carryforward will begin to expire in 2026. The foreign
net operating loss carryforwards can be carried forward
indefinitely. State and local net operating loss
carryforwards of $1.19 billion will begin to expire in 2013.
If these carryforwards expire, they will not have a material
impact on the firm’s results of operations. The firm
had foreign tax credit carryforwards of $0 and $12 million
as of December 2012 and December 2011, respectively.
The firm recorded a related net deferred income tax asset of
$0 and $6 million as of December 2012 and
December 2011, respectively.
The firm had capital loss carryforwards of $0 and
$6 million as of December 2012 and December 2011,
respectively. The firm recorded a related net deferred
income tax asset of $0 and $2 million as of December 2012
and December 2011, respectively.
The valuation allowance increased by $103 million and
$15 million during 2012 and 2011, respectively. The
increase in 2012 was primarily due to the acquisition of
deferred tax assets considered more likely than not to be
unrealizable. The increase in 2011 was due to losses
considered more likely than not to expire unused.
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