Goldman Sachs 2013 Annual Report Download - page 199

Notes to Consolidated Financial Statements
Note 24.
Income Taxes
Provision for Income Taxes
Income taxes are provided for using the asset and liability
method under which deferred tax assets and liabilities are
recognized for temporary differences between the financial
reporting and tax bases of assets and liabilities. The firm
reports interest expense related to income tax matters in
“Provision for taxes” and income tax penalties in
“Other expenses.”
The tables below present the components of the provision/
(benefit) for taxes and a reconciliation of the U.S. federal
statutory income tax rate to the firm’s effective income
tax rate.
Year Ended December
in millions 2013 2012 2011
Current taxes
U.S. federal $2,589 $3,013 $ 405
State and local 466 628 392
Non-U.S. 613 447 204
Total current tax expense 3,668 4,088 1,001
Deferred taxes
U.S. federal (188) (643) 683
State and local 67 38 24
Non-U.S. 150 249 19
Total deferred tax (benefit)/expense 29 (356) 726
Provision for taxes $3,697 $3,732 $1,727
Year Ended December
2013 2012 2011
U.S. federal statutory income tax rate 35.0% 35.0% 35.0%
State and local taxes, net of U.S. federal
income tax effects 4.1 3.8 4.4
Tax credits (1.0) (1.0) (1.6)
Non-U.S. operations 1(5.6) (4.8) (6.7)
Tax-exempt income, including dividends (0.5) (0.5) (2.4)
Other (0.5) 0.8 (0.7)
Effective income tax rate 31.5% 33.3% 28.0%
1. Includes the impact of permanently reinvested earnings.
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 and primarily relate to the ability to utilize
losses in various tax jurisdictions. 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, excluding the impact of
netting within tax jurisdictions.
As of December
in millions 2013 2012
Deferred tax assets
Compensation and benefits $2,740 $2,447
Unrealized losses 309 1,477
ASC 740 asset related to unrecognized tax benefits 475 685
Non-U.S. operations 1,318 965
Net operating losses 232 222
Occupancy-related 108 119
Other comprehensive income-related 69 114
Other, net 729 435
5,980 6,464
Valuation allowance (183) (168)
Total deferred tax assets $5,797 $6,296
Depreciation and amortization 1,269 1,230
Other comprehensive income-related 68 85
Total deferred tax liabilities $1,337 $1,315
Goldman Sachs 2013 Annual Report 197