Goldman Sachs 2015 Annual Report Download - page 205

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
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 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 2015 2014
Deferred tax assets
Compensation and benefits $2,744 $3,032
ASC 740 asset related to unrecognized tax benefits 197 172
Non-U.S. operations 1,200 1,418
Net operating losses 426 336
Occupancy-related 80 78
Other comprehensive income-related 521 277
Other, net 836 545
Subtotal 6,004 5,858
Valuation allowance (73) (64)
Total deferred tax assets $5,931 $5,794
Depreciation and amortization $1,254 $1,176
Unrealized gains 853 406
Total deferred tax liabilities $2,107 $1,582
The firm has recorded deferred tax assets of $426 million
and $336 million as of December 2015 and
December 2014, respectively, in connection with U.S.
federal, state and local and foreign net operating loss
carryforwards. The firm also recorded a valuation
allowance of $24 million and $26 million as of
December 2015 and December 2014, respectively, related
to these net operating loss carryforwards.
As of December 2015, the U.S. federal and foreign net
operating loss carryforwards were $106 million and
$1.48 billion, respectively. If not utilized, the U.S. federal
net operating loss carryforward will begin to expire in
2016. The foreign net operating loss carryforwards can be
carried forward indefinitely. State and local net operating
loss carryforwards of $798 million will begin to expire in
2016. If these carryforwards expire, they will not have a
material impact on the firm’s results of operations. The firm
had no foreign tax credit carryforwards and no related net
deferred income tax assets as of December 2015 and
December 2014.
The firm had no capital loss carryforwards and no related
net deferred income tax assets as of December 2015 and
December 2014.
The valuation allowance increased by $9 million during
2015 and decreased by $119 million during 2014. The
increase in 2015 was primarily due to an increase in
deferred tax assets from which the firm does not expect to
realize any benefit. The decrease in 2014 was primarily due
to a decrease in deferred tax assets from which the firm does
not expect to realize any benefit.
The firm permanently reinvests eligible earnings of certain
foreign subsidiaries and, accordingly, does not accrue any
U.S. income taxes that would arise if such earnings were
repatriated. As of December 2015 and December 2014, this
policy resulted in an unrecognized net deferred tax liability
of $5.66 billion and $4.66 billion, respectively, attributable
to reinvested earnings of $28.55 billion and $24.88 billion,
respectively.
Goldman Sachs 2015 Form 10-K 193