Sallie Mae 2012 Annual Report Download - page 185

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. Income Taxes (Continued)
The tax effect of temporary differences that give rise to deferred tax assets and liabilities include the
following:
December 31,
(Dollars in millions) 2012 2011
Deferred tax assets:
Loan reserves ....................................................... $ 940 $ 959
Market value adjustments on student loans, investments and derivatives ........ 671 595
Stock-based compensation plans ........................................ 77 78
Deferred revenue .................................................... 60 62
Operating loss and credit carryovers ..................................... 38 49
Accrued expenses not currently deductible ................................ 34 51
Other ............................................................. 4 48
Total deferred tax assets .............................................. 1,824 1,842
Deferred tax liabilities:
Gains/(losses) on repurchased debt ...................................... 306 297
Other ............................................................. 65 74
Total deferred tax liabilities ........................................... 371 371
Net deferred tax assets ................................................ $1,453 $1,471
Included in other deferred tax assets is a valuation allowance of $29 million and $31 million as of
December 31, 2012 and 2011, respectively, against a portion of the Company’s federal, state and international
deferred tax assets. The valuation allowance is primarily attributable to deferred tax assets for federal and state
capital loss carryovers and state and international net operating loss carryovers that management believes it is more
likely than not will expire prior to being realized. The ultimate realization of the deferred tax assets is dependent
upon the generation of future taxable income of the appropriate character (i.e. capital or ordinary) during the period
in which the temporary differences become deductible. Management considers, among other things, the economic
slowdown, the scheduled reversals of deferred tax liabilities, and the history of positive taxable income available for
net operating loss carrybacks in evaluating the realizability of the deferred tax assets.
As of December 31, 2012, we have federal capital loss carryovers of $45 million which begin to expire in
2016, apportioned state net operating loss carryforwards of $384 million which begin to expire in 2016, state
capital loss carryovers of $32 million which begin to expire in 2015, and international net operating loss
carryforwards of $.4 million which begin to expire in 2032.
Accounting for Uncertainty in Income Taxes
The following table summarizes changes in unrecognized tax benefits:
December 31,
(Dollars in millions) 2012 2011 2010
Unrecognized tax benefits at beginning of year ................... $45.9 $41.7 $104.4
Increases resulting from tax positions taken during a prior period ...... 20.0 20.5 13.1
Decreases resulting from tax positions taken during a prior period ...... (18.0) (2.1) (47.5)
Increases/(decreases) resulting from tax positions taken during the
current period ............................................. 11.3 (9.1) (2.5)
Decreases related to settlements with taxing authorities .............. (14.7) — (87.6)
Increases related to settlements with taxing authorities ............... — 0.4 69.1
Reductions related to the lapse of statute of limitations ............... (3.3) (5.5) (7.3)
Unrecognized tax benefits at end of year ........................ $41.2 $45.9 $ 41.7
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