Honeywell 2014 Annual Report Download - page 54

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Deferred tax assets (liabilities)
The tax effects of temporary differences and tax carryforwards which give rise to future income tax
benefits and payables are as follows:
Deferred tax assets: 2014 2013
December 31,
Pension. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 573 $ 32
Postretirement benefits other than pensions . . . . . . . . . . . . . . . . . . . . . . 441 499
Asbestos and environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 477 437
Employee compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387 382
Other accruals and reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 672 702
Net operating and capital losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 639 838
Tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199 266
Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,388 3,156
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (560) (614)
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,828 $ 2,542
Deferred tax liabilities:
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (612) $ (654)
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,060) (1,126)
Other asset basis differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (286) (350)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) (22)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,965) (2,152)
Net deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 863 $ 390
The net deferred tax assets are included as components of Current and Non-Current Deferred
Income Taxes and Accrued Liabilities within the Consolidated Balance Sheet.
Our net deferred tax asset of $863 million consists of $305 million related to non-U.S. operations
which are comprised principally of net deductible temporary differences and net operating loss, capital
loss and tax credit carryforwards (mainly in Canada and the United Kingdom). We maintain a valuation
allowance of $557 million against a portion of the non-U.S. gross deferred tax assets. Our valuation
allowance decreased by $54 million in 2014, increased by $16 million in 2013 and increased by
$7 million in 2012. The amount of the change in the valuation allowance that was credited to income
tax expense for 2014 was $10 million and the amounts charged to income tax expense for 2013 and
2012 were $49 million and $18 million, respectively. In the event we determine that we will not be able
to realize our net deferred tax assets in the future, we will reduce such amounts through a charge to
income in the period such determination is made. Conversely, if we determine that we will be able to
realize net deferred tax assets in excess of the carrying amounts, we will decrease the recorded
valuation allowance through a credit to income tax expense in the period that such determination is
made.
As of December 31, 2014, our net operating loss, capital loss and tax credit carryforwards were as
follows:
Jurisdiction
Expiration
Period
Net Operating
and Capital Loss
Carryforwards
Tax Credit
Carryforwards
U.S. Federal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2032 $ 1 $ 51
U.S. State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2034 2,200 35
Non-U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2034 2,463 148
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,664 $234
45
HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)