Motorola 2012 Annual Report Download - page 77

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Components of income tax expense (benefit) are as follows:
Years ended December 31 2012 2011 2010
United States $5 $2$
(45)
Other nations 89 30 183
States (U.S.) 1374
Current income tax expense 95 35 212
United States 296 (118) 373
Other nations (12)111 (54)
States (U.S.) (42)(31)(128)
Deferred income tax expense (benefit) 242 (38) 191
Total income tax expense (benefit) $ 337 $(3) $ 403
Deferred tax charges that were recorded within Accumulated other comprehensive loss in the Company’s consolidated
balance sheets resulted from retirement benefit adjustments, currency translation adjustments, net gains (losses) on derivative
instruments and fair value adjustments to available-for-sale securities. The adjustments were $(272) million, $(259) million and
$41 million for the years ended December 31, 2012, 2011 and 2010, respectively.
The Company evaluates its permanent reinvestment assertions with respect to foreign earnings at each reporting period
and, except for certain earnings that the Company intends to reinvest indefinitely due to the capital requirements of the foreign
subsidiaries or due to local country restrictions, accrues for the U.S. federal and foreign income tax applicable to the earnings.
Undistributed earnings that the Company intends to reinvest indefinitely, and for which no income taxes have been
provided, aggregate to $1.0 billion, $1.0 billion and $1.3 billion at December 31, 2012, 2011 and 2010, respectively. The
Company currently has no plans to repatriate the foreign earnings permanently reinvested and therefore, the time and manner of
repatriation is uncertain. If circumstances change and it becomes apparent that some or all of the permanently reinvested
earnings will be remitted to the U.S. in the foreseeable future, an additional income tax charge may be necessary. On a cash
basis, these repatriations from the Company's non-U.S. subsidiaries could require the payment of additional taxes. The portion
of earnings not reinvested indefinitely may be distributed without an additional income tax charge given the U.S. federal and
foreign income tax accrued on undistributed earnings and the utilization of available foreign tax credits.
Differences between income tax expense computed at the U.S. federal statutory tax rate of 35% and income tax expense
(benefit) as reflected in the consolidated statements of operations are as follows:
Years ended December 31 2012 2011 2010
Income tax expense at statutory rate $ 425 $ 258 $ 232
Taxes on non-U.S. earnings (10)(23)(10)
State income taxes (27)(2)(35)
Valuation allowances (60)(237)(18)
Tax on undistributed non-U.S. earnings 30 51 287
Other provisions (7)(17)(45)
Research credits —(11)(6)
Tax law changes ——18
Section 199 deduction (14)(22)(20)
$ 337 $(3) $ 403
Gross deferred tax assets were $4.7 billion and $5.1 billion at December 31, 2012 and 2011, respectively. Deferred tax
assets, net of valuation allowances, were $4.4 billion and $4.7 billion at December 31, 2012 and 2011, respectively. Gross
deferred tax liabilities were $1.4 billion and $1.7 billion at December 31, 2012 and 2011, respectively.