Alcoa 2011 Annual Report Download - page 143

The components of net deferred tax assets and liabilities were as follows:
2011 2010
December 31,
Deferred
tax
assets
Deferred
tax
liabilities
Deferred
tax
assets
Deferred
tax
liabilities
Depreciation $ 74 $ 933 $ 204 $1,330
Employee benefits 2,668 51 2,383 45
Loss provisions 325 9 391 40
Deferred income/expense 45 181 104 159
Tax loss carryforwards 2,035 - 1,953 -
Tax credit carryforwards 477 - 503 -
Derivatives and hedging activities 109 43 162 12
Other 315 288 633 547
6,048 1,505 6,333 2,133
Valuation allowance (1,398) - (1,268) -
$ 4,650 $1,505 $ 5,065 $2,133
The following table details the expiration periods of the deferred tax assets presented above:
December 31, 2011
Expires
within
10 years
Expires
within
11-20 years
No
expiration* Other* Total
Tax loss carryforwards $ 340 $ 815 $ 880 $ - $ 2,035
Tax credit carryforwards 360 58 59 - 477
Other - - 507 3,029 3,536
Valuation allowance (231) (643) (213) (311) (1,398)
$ 469 $ 230 $1,233 $2,718 $ 4,650
* Deferred tax assets with no expiration may still have annual limitations on utilization. Other represents deferred tax
assets whose expiration is dependent upon the reversal of the underlying temporary difference. A substantial amount
of Other relates to employee benefits that will become deductible for tax purposes over an extended period of time as
contributions are made to employee benefit plans and payments are made to retirees.
The total deferred tax asset (net of valuation allowance) is supported by taxable temporary differences that reverse
within the carryforward period (approximately 25%), tax planning strategies (approximately 5%), and projections of
future taxable income exclusive of reversing temporary differences (approximately 70%).
Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will
not be realized. In evaluating the need for a valuation allowance, management considers all potential sources of taxable
income, including income available in carryback periods, future reversals of taxable temporary differences, projections
of taxable income, and income from tax planning strategies, as well as all available positive and negative evidence.
Positive evidence includes factors such as a history of profitable operations, projections of future profitability within
the carryforward period, including from tax planning strategies, and the Company’s experience with similar operations.
Existing favorable contracts and the ability to sell product into established markets are additional positive evidence.
Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward periods that
are not long enough to allow the utilization of the deferred tax asset based on existing projections of income. In certain
jurisdictions, deferred tax assets related to cumulative losses exist without a valuation allowance where in
management’s judgment the weight of the positive evidence more than offsets the negative evidence of the cumulative
losses. Upon changes in facts and circumstances, management may conclude that deferred tax assets for which no
valuation allowance is currently recorded may not be realizable in future periods, resulting in a future charge to record
a valuation allowance. Existing valuation allowances are re-examined under the same standards of positive and
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