UPS 2014 Annual Report Download - page 118

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
106
Deferred tax liabilities and assets are comprised of the following at December 31 (in millions):
2014 2013
Fixed assets and capitalized software $ (4,816)$ (4,624)
Other (424)(756)
Deferred tax liabilities (5,240)(5,380)
Pension and postretirement benefits 4,722 3,086
Loss and credit carryforwards (non-U.S. and state) 250 279
Insurance reserves 745 765
Stock compensation 242 70
Other 630 933
Deferred tax assets 6,589 5,133
Deferred tax assets valuation allowance (208)(251)
Deferred tax asset (net of valuation allowance) 6,381 4,882
Net deferred tax asset (liability) $ 1,141 $ (498)
Amounts recognized in the consolidated balance sheets:
Current deferred tax assets $ 590 $ 684
Current deferred tax liabilities (included in other current liabilities) (18)(48)
Non-current deferred tax assets 652 110
Non-current deferred tax liabilities (83)(1,244)
Net deferred tax asset (liability) $ 1,141 $ (498)
The valuation allowance changed by $(43), $31 and $15 million during the years ended December 31, 2014, 2013 and
2012, respectively.
We have U.S. state and local operating loss and credit carryforwards as follows (in millions):
2014 2013
U.S. state and local operating loss carryforwards $ 815 $ 546
U.S. state and local credit carryforwards $ 52 $ 42
The operating loss carryforwards expire at varying dates through 2034. The state credits can be carried forward for
periods ranging from three years to indefinitely.
We also have non-U.S. loss carryforwards of approximately $586 million as of December 31, 2014, the majority of which
may be carried forward indefinitely. As indicated in the table above, we have established a valuation allowance for certain non-
U.S. and state carryforwards, due to the uncertainty resulting from a lack of previous taxable income within the applicable tax
jurisdictions.
Undistributed earnings of foreign subsidiaries amounted to approximately $4.683 billion at December 31, 2014. Those
earnings are considered to be indefinitely reinvested and, accordingly, no deferred income taxes have been provided thereon.
Upon distribution of those earnings in the form of dividends or otherwise, we would be subject to income taxes and withholding
taxes payable in various jurisdictions, which could potentially be offset by foreign tax credits. Determination of the amount of
unrecognized deferred income tax liability is not practicable because of the complexities associated with its hypothetical
calculation.