Alcoa 2014 Annual Report Download - page 163

The components of net deferred tax assets and liabilities were as follows:
2014 2013
December 31,
Deferred
tax
assets
Deferred
tax
liabilities
Deferred
tax
assets
Deferred
tax
liabilities
Depreciation $ 147 $1,187 $ 185 $1,150
Employee benefits 2,413 37 2,499 36
Loss provisions 441 10 437 14
Deferred income/expense 30 230 87 188
Tax loss carryforwards 2,075 - 2,229 -
Tax credit carryforwards 625 - 567 -
Derivatives and hedging activities 5 39 74 25
Other 521 297 310 261
6,257 1,800 6,388 1,674
Valuation allowance (1,668) - (1,804) -
$ 4,589 $1,800 $ 4,584 $1,674
The following table details the expiration periods of the deferred tax assets presented above:
December 31, 2014
Expires
within
10 years
Expires
within
11-20 years
No
expiration* Other* Total
Tax loss carryforwards $ 330 $ 619 $1,126 $ - $ 2,075
Tax credit carryforwards 428 86 111 - 625
Other - - 488 3,069 3,557
Valuation allowance (341) (645) (392) (290) (1,668)
$ 417 $ 60 $1,333 $2,779 $ 4,589
* 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 projections of future taxable income exclusive
of reversing temporary differences (64%), taxable temporary differences that reverse within the carryforward period
(35%), and tax planning strategies (1%).
Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not (greater than 50%) 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 Alcoa’s experience with
similar operations. Existing favorable contracts and the ability to sell products 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 for the utilization of a 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 realized, resulting in a future charge to
establish a valuation allowance. Existing valuation allowances are re-examined under the same standards of positive
and negative evidence. If it is determined that it is more likely than not that a deferred tax asset will be realized, the
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