MasterCard 2013 Annual Report Download - page 96

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
92
Deferred Taxes
Deferred tax assets and liabilities represent the expected future tax consequences of temporary differences between the
carrying amounts and the tax basis of assets and liabilities. The components of deferred tax assets and liabilities at
December 31 are as follows:
2013 2012
(in millions)
Deferred Tax Assets
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 124 $ 91
Compensation and benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 173
State taxes and other credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 96
Net operating losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 34
Other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 31
Less: Valuation allowance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28) (25)
Total Deferred Tax Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481 400
Deferred Tax Liabilities
Prepaid expenses and other accruals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 56
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 113
Property, plant and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 122
Other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 42
Total Deferred Tax Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300 333
Net Deferred Tax Assets1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 181 $ 67
1 $5 million and $17 million of current deferred tax liabilities have been included in other current liabilities on the balance sheet at December 31,
2013 and 2012, respectively.
The 2013 and 2012 valuation allowances relate primarily to the Company's ability to recognize tax benefits associated
with certain foreign net operating losses. The recognition of these benefits is dependent upon the future taxable income
in such foreign jurisdictions and the ability under tax law in these jurisdictions to utilize net operating losses following
a change in control.
A reconciliation of the beginning and ending balance for the Company's unrecognized tax benefits for the years ended
December 31, is as follows:
2013 2012 2011
(in millions)
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 257 $ 214 $ 165
Additions:
Current year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 58 34
Prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 15 23
Reductions:
Prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8) (21) (2)
Settlements with tax authorities . . . . . . . . . . . . . . . . . . . . . . . . . (2) (2) (1)
Expired statute of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . (19) (7) (5)
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 320 $ 257 $ 214
The entire unrecognized tax benefits of $320 million, if recognized, would reduce the effective tax rate. It is possible
that the amount of unrecognized benefit with respect to the Company's uncertain tax positions may change within the
next twelve months. An estimate of the range of possible changes cannot be made until the issues are further developed,