MasterCard 2008 Annual Report Download - page 127
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except percent and per share data)
Note 19. Income Tax
The total income tax provision for the years ended December 31 is comprised of the following components:
2008 2007 2006
Current
Federal ............................................. $118,387 $371,250 $140,548
State and local ....................................... 13,124 36,661 5,803
Foreign ............................................ 223,143 183,127 54,200
354,654 591,038 200,551
Deferred
Federal ............................................. (481,783) (8,666) 41,291
State and local ....................................... 2,002 5,429 2,575
Foreign ............................................ (4,171) (2,255) (435)
(483,952) (5,492) 43,431
Total income tax expense (benefit) ....................... $(129,298) $585,546 $243,982
The domestic and foreign components of earnings (loss) before income taxes for the years ended
December 31 are as follows:
2008 2007 2006
United States ...................................... $(986,175) $ 959,977 $146,575
Foreign ........................................... 602,962 711,455 147,597
$(383,213) $1,671,432 $294,172
MasterCard has not provided for U.S. federal income and foreign withholding taxes on approximately
$706,691 of undistributed earnings from non-U.S. subsidiaries as of December 31, 2008 because such earnings
are intended to be reinvested indefinitely outside of the United States. If these earnings were distributed, foreign
tax credits may become available under current law to reduce the resulting U.S. income tax liability, however,
the amount of the tax and credits is not practically determinable.
The provision for income taxes differs from the amount of income tax determined by applying the
appropriate statutory U.S. federal income tax rate to pretax income (loss) for the years ended December 31, as a
result of the following:
2008 2007 2006
Amount Percent Amount Percent Amount Percent
Income (loss) before income tax expense (benefit) . . . $(383,213) $1,671,432 $294,172
Federal statutory tax ........................... $(134,125) 35.0% $ 585,001 35.0% $102,960 35.0%
State tax effect, net of federal benefit ............. 11,140 (2.9) 27,359 1.6 5,444 1.8
Non-deductible, charitable stock contribution ....... — — — — 138,175 47.0
Foreign tax effect, net of federal benefit ........... 1,969 (0.5) (12,069) (0.7) (5,699) (1.9)
Non-deductible expenses and other differences ...... 2,260 (0.7) (2,918) (0.2) 13,086 4.4
Tax exempt income ........................... (10,542) 2.8 (11,827) (0.7) (9,984) (3.4)
Income tax expense (benefit) .................... $(129,298) 33.7% $ 585,546 35.0% $243,982 82.9%
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