Goldman Sachs 2015 Annual Report Download - page 204

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 23.
Interest Income and Interest Expense
Interest is recorded over the life of the instrument on an
accrual basis based on contractual interest rates. The table
below presents the firm’s sources of interest income and
interest expense.
Year Ended December
$ in millions 2015 2014 2013
Interest income
Deposits with banks $ 161 $ 164 $ 186
Securities borrowed, securities
purchased under agreements to
resell and federal funds sold 110 (81) 43
Financial instruments owned, at fair
value 5,842 7,452 8,159
Loans receivable 1,191 708 296
Other interest 21,248 1,361 1,376
Total interest income 8,452 9,604 10,060
Interest expense
Deposits 408 333 387
Securities loaned and securities sold
under agreements to repurchase 330 431 576
Financial instruments sold, but not
yet purchased, at fair value 1,319 1,741 2,054
Short-term secured and unsecured
borrowings 429 447 394
Long-term secured and unsecured
borrowings 3,878 3,460 3,752
Other interest 3(976) (855) (495)
Total interest expense 5,388 5,557 6,668
Net interest income $3,064 $4,047 $ 3,392
1. Includes rebates paid and interest income on securities borrowed.
2. Includes interest income on customer debit balances and other interest-
earning assets.
3. Includes rebates received on other interest-bearing liabilities and interest
expense on customer credit balances.
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
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 2015 2014 2013
Current taxes
U.S. federal $1,116 $1,908 $2,589
State and local (12) 1576 466
Non-U.S. 1,166 901 613
Total current tax expense 2,270 3,385 3,668
Deferred taxes
U.S. federal 397 190 (188)
State and local 62 38 67
Non-U.S. (34) 267 150
Total deferred tax expense 425 495 29
Provision for taxes $2,695 $3,880 $3,697
1. Includes the impact of a settlement of state and local examinations.
Year Ended December
2015 2014 2013
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 0.3% 23.2% 4.1%
Tax credits (1.7)% (1.1)% (1.0)%
Non-U.S. operations 1(12.1)% (5.8)% (5.6)%
Tax-exempt income, including
dividends (0.7)% (0.3)% (0.5)%
Non-deductible legal expenses 10.2% 3——
Other (0.3)% 0.4% (0.5)%
Effective income tax rate 30.7% 31.4% 31.5%
1. Includes the impact of permanently reinvested earnings.
2. Includes the impact of a settlement of state and local examinations.
3. Substantially all of the non-deductible legal expenses relate to provisions for
the agreement in principle with the RMBS Working Group. See Note 27 for
further information about this agreement in principle.
192 Goldman Sachs 2015 Form 10-K