Dow Chemical 2009 Annual Report Download - page 178

Table of Contents
Provision (Credit) for Income Taxes
2009 2008 2007
In millions Current Deferred Total Current Deferred Total Current Deferred Total
Federal $ 65 $ (538) $ (473) $ 3 $ (541) $ (538) $ 77 $ 128 $ 205
State and local 27 (15) 12 6 (17) (11) 87 3 90
Foreign 463 (99) 364 918 282 1,200 586 349 935
Total $ 555 $ (652) $ (97) $ 927 $ (276) $ 651 $ 750 $ 480 $ 1,230
The provision for income taxes attributable to discontinued operations (domestic) was $65 million for 2009, $16 million for 2008 and $14 million for
2007 (see Note E).
Deferred Tax Balances at December 31 2009 2008
In millions
Deferred Tax
Assets (1)
Deferred Tax
Liabilities (2)
Deferred Tax
Assets (1)
Deferred Tax
Liabilities
Property $ 20 $ 2,647 $ 99 $ 1,908
Tax loss and credit carryforwards 2,414 - 2,226 -
Postretirement benefit obligations 3,097 1,039 2,642 950
Other accruals and reserves 1,963 227 1,462 306
Intangibles 40 1,646 56 76
Inventory 203 182 139 200
Long-term debt 8 107 3 89
Investments 103 21 186 1
Other – net 460 370 791 153
Subtotal $ 8,308 $ 6,239 $ 7,604 $ 3,683
Valuation allowance (721) - (487) -
Total $ 7,587 $ 6,239 $ 7,117 $ 3,683
(1) Included in current deferred tax assets are prepaid tax assets totaling $151 million in 2009 and $141 million in 2008.
(2) The Company assumed $2,793 million of deferred tax liabilities with the April 1, 2009 acquisition of Rohm and Haas; see Note D.
Uncertain Tax Positions
On January 1, 2007, the Company adopted the provisions of FIN No. 48. The cumulative effect of adoption was a $290 million reduction of retained
earnings. At December 31, 2009, the total amount of unrecognized tax benefits was $650 million ($736 million at December 31, 2008), of which
$610 million would impact the effective tax rate, if recognized ($690 million at December 31, 2008).
Interest and penalties associated with uncertain tax positions are recognized as components of the “Provision for income taxes,” and totaled $10 million in
2009, $3 million in 2008 and $29 million in 2007. The Company’s accrual for interest and penalties was $68 million at December 31, 2009 and
$124 million at December 31, 2008.
Total Gross Unrecognized Tax Benefits
In millions 2009 2008
Balance at January 1 $ 736 $ 892
Increases related to positions taken on items from prior years 57 41
Decreases related to positions taken on items from prior years (25) (191)
Increases related to positions taken in the current year 71 34
Settlement of uncertain tax positions with tax authorities (172) (29)
Decreases due to expiration of statutes of limitations (17) (11)
Balance at December 31 $ 650 $ 736
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