Charles Schwab 2013 Annual Report Download - page 97

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THE CHARLES SCHWAB CORPORATION
Notes to Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)
- 86 -
The temporary differences that created deferred tax assets and liabilities are detailed below:
December 31, 2013 2012
Deferred tax assets:
Employee compensation, severance, and benefits $ 190 $ 189
Facilities lease commitments 33 35
Reserves and allowances 30 37
State and local taxes 12 -
Net operating loss carryforwards 6 6
Total deferred tax assets 271 267
Valuation allowance (4) (3)
Deferred tax assets – net of valuation allowance 267 264
Deferred tax liabilities:
Depreciation and amortization (142) (166)
Capitalized internal-use software development costs (62) (50)
Deferred cancellation of debt income (11) (11)
Deferred loan costs (10) (15)
Deferred Senior Note exchange (7) (6)
Net unrealized gain on securities available for sale (5) (179)
Other (2) (7)
Total deferred tax liabilities (239) (434)
Deferred tax asset (liability) – net (1) $ 28 $ (170)
(1) Amounts are included in other assets and in accrued expenses and other liabilities at December 31, 2013 and 2012,
respectively.
A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:
Year Ended December 31, 2013 2012 2011
Federal statutory income tax rate 35.0 % 35.0 % 35.0 %
State income taxes, net of federal tax benefit (1) 2.3 1.2 2.5
Other (0.1) (0.2) 0.4
Effective income tax rate 37.2 % 36.0 % 37.9 %
(1) Includes the impact of a non-recurring state tax benefit of which $4 million and $20 million were recorded in 2013 and
2012, respectively.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
December 31, 2013 2012
Balance at beginning of year $ 12 $ 13
Additions for tax positions related to the current year 1 1
Additions for tax positions related to prior years - 1
Reductions due to lapse of statute of limitations (2) (2)
Reductions for settlements with tax authorities (1) (1)
Balance at end of year $ 10 $ 12
The federal returns for 2010 through 2012 remain open to Federal tax examinations. The years open to examination by state
and local governments vary by jurisdiction.