Morgan Stanley 2010 Annual Report Download - page 241

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
22. Income Taxes.
The provision for (benefit from) income taxes from continuing operations consisted of:
2010 2009
Fiscal
2008
One Month Ended
December 31,
2008
(dollars in millions)
Current:
U.S. federal ........................................ $ 213 $160 $ 445 $ 42
U.S. state and local .................................. 162 45 78 8
Non-U.S. .......................................... 850 340 1,182 12
$1,225 $ 545 $ 1,705 $ 62
Deferred:
U.S. federal ........................................ $ (863) $(455) $(1,396) $(670)
U.S. state and local .................................. 340 (360) (106) 31
Non-U.S. .......................................... 37 (71) (187) (148)
$ (486) $(886) $(1,689) $(787)
Provision for (benefit from) income taxes from continuing
operations ........................................... $ 739 $(341) $ 16 $(725)
Provision for (benefit from) income taxes from discontinuing
operations ........................................... $ 367 $ (49) $ 464 $ 2
The following table reconciles the provision for (benefit from) income taxes to the U.S. federal statutory income
tax rate:
2010 2009
Fiscal
2008
One Month
Ended December 31,
2008
U.S. federal statutory income tax rate .......................... 35.0% 35.0% 35.0% 35.0%
U.S. state and local income taxes, net of U.S. federal income tax
benefits ................................................ 6.1 (21.0) (1.4) (1.3)
Lower tax rates applicable to non-U.S. earnings .................. (19.8) (26.7) (20.2) 1.2
Domestic tax credits ........................................ (3.6) (19.6) (18.0) 1.5
Tax exempt income ........................................ (1.7) (6.0) (14.3) 0.2
Goodwill ................................................ — — 18.4 —
Other ................................................... (4.1) 3.6 1.8 (0.2)
Effective income tax rate(1) ................................. 11.9% (34.7)% 1.3% 36.4%
(1) Results for 2010 included tax benefits of $382 million related to the reversal of U.S. deferred tax liabilities associated with prior-years’
undistributed earnings of certain non-U.S. subsidiaries that were determined to be indefinitely reinvested abroad, $345 million associated
with the remeasurement of net unrecognized tax benefits and related interest based on new information regarding the status of federal and
state examinations, and $277 million associated with the planned repatriation of non-U.S. earnings at a cost lower than originally
estimated. Excluding the benefits noted above, the effective tax rate from continuing operations in 2010 would have been 28%. The
effective tax rate for 2009 includes a tax benefit of $331 million resulting from the cost of anticipated repatriation of non-U.S. earnings at
lower than previously estimated tax rates. Excluding this benefit, the annual effective tax rate from continuing operations for 2009 would
have been a benefit of 1%.
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