Boeing 2011 Annual Report Download - page 82

Net deferred tax assets at December 31 were as follows:
2011 2010
Deferred tax assets $ 16,181 $ 14,383
Deferred tax liabilities (12,939) (10,736)
Valuation allowance (101) (105)
Net deferred tax assets $ 3,141 $ 3,542
The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available
evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
Included in the net deferred tax assets at December 31, 2011 and 2010 are deferred tax assets in the
amounts of $9,743 and $8,186 related to Accumulated other comprehensive loss.
We have provided for U.S. deferred income taxes and foreign withholding tax in the amount of $66 on
undistributed earnings not considered permanently reinvested in our non-U.S. subsidiaries. We have
not provided for U.S. deferred income taxes or foreign withholding tax on the remainder of
undistributed earnings from our non-U.S. subsidiaries because such earnings are considered to be
permanently reinvested and it is not practicable to estimate the amount of tax that may be payable
upon distribution.
As of December 31, 2011 and 2010, the amounts accrued for the payment of income tax-related
interest and penalties included in the Consolidated Statements of Financial Position were as follows:
interest of $48 and $170 and penalties of $10 and $12. The amounts of interest (benefit)/expense were
($94), ($105), and $45 for the years ended December 31, 2011, 2010, and 2009, respectively. The
interest benefits recorded during 2011 and 2010 were primarily related to the 2004-2006 and 1998-
2003 federal audit settlements.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
2011 2010 2009
Unrecognized tax benefits – January 1 $1,198 $1,787 $1,453
Gross increases – tax positions in prior periods 154 95 219
Gross decreases – tax positions in prior periods (383) (465) (31)
Gross increases – current-period tax positions 28 76 148
Gross decreases – current-period tax positions (15) (40)
Settlements (42) (254)
Lapse of statute of limitations (1) (1) (2)
Unrecognized tax benefits – December 31 $ 939 $1,198 $1,787
As of December 31, 2011, 2010 and 2009, the total amount of unrecognized tax benefits was $939,
$1,198, and $1,787 of which $838, $1,074, and $1,452 would affect the effective tax rate, if
recognized. As of December 31, 2011, these amounts are primarily associated with U.S. federal tax
issues such as the amount of research and development tax credits claimed, the domestic production
activities deductions claimed, and U.S. taxation of foreign earnings. Also included in these amounts are
accruals for domestic state tax issues such as the allocation of income among various state tax
jurisdictions and the amount of state tax credits claimed.
The research and development credit expired on December 31, 2011. Members of Congress have
introduced bills that would extend the credit. If the Research and Development credit is not extended
there would be an unfavorable impact to our 2012 effective income tax rate. For the years ended
December 31, 2011, 2010 and 2009, the Research and Development credit reduced our effective tax
rate by 2.7%, 3.5%, and 10.1%, respectively.
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