Dow Chemical 2012 Annual Report Download - page 158

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Deferred Tax Balances at December 31 2012 2011
In millions
Deferred Tax
Assets (1)
Deferred Tax
Liabilities
Deferred Tax
Assets (1)
Deferred Tax
Liabilities
Property $ 58 $ 2,128 $ 102 $ 2,265
Tax loss and credit carryforwards 1,954 — 2,294 —
Postretirement benefit obligations 4,900 1,291 3,916 1,184
Other accruals and reserves 2,167 329 1,954 604
Intangibles 218 994 152 1,076
Inventory 240 179 229 289
Long-term debt — 599 — 726
Investments 317 183 186 183
Other – net 1,168 642 1,185 729
Subtotal $ 11,022 $ 6,345 $ 10,018 $ 7,056
Valuation allowances (1,399) — (1,152) —
Total $ 9,623 $ 6,345 $ 8,866 $ 7,056
(1) Included in current deferred tax assets are prepaid tax assets totaling $218 million in 2012 and $210 million in 2011.
Gross operating loss carryforwards amounted to $10,436 million at December 31, 2012 and $11,626 million at
December 31, 2011. At December 31, 2012, $1,513 million of the operating loss carryforwards were subject to expiration in
2013 through 2017. The remaining operating loss carryforwards expire in years beyond 2017 or have an indefinite carryforward
period. Tax credit carryforwards at December 31, 2012 amounted to $226 million ($403 million at December 31, 2011), net of
uncertain tax positions, of which $6 million is subject to expiration in 2013 through 2017. The remaining tax credit
carryforwards expire in years beyond 2017 or have an indefinite carryforward period.
The Company had valuation allowances that primarily related to the realization of recorded tax benefits on tax loss
carryforwards from operations in the United States, Brazil and Asia Pacific of $1,399 million at December 31, 2012 and
$1,152 million at December 31, 2011.
Undistributed earnings of foreign subsidiaries and related companies that are deemed to be permanently invested amounted
to $14,504 million at December 31, 2012, $12,741 million at December 31, 2011 and $9,798 million at December 31, 2010.
The increase in the undistributed earnings during 2012 is partly due to changes in permanent reinvestment assertions of certain
subsidiaries located in Europe and Asia Pacific. It is not practicable to calculate the unrecognized deferred tax liability on
undistributed earnings.
Total Gross Unrecognized Tax Benefits
In millions 2012 2011 2010
Balance at January 1 $ 339 $ 319 $ 650
Increases related to positions taken on items from prior years 66 5 8
Decreases related to positions taken on items from prior years (32) (11) (33)
Increases related to positions taken in the current year 53 70 24
Settlement of uncertain tax positions with tax authorities (9) (21) (300)
Decreases due to expiration of statutes of limitations (8) (23) (30)
Balance at December 31 $ 409 $ 339 $ 319
At December 31, 2012, the total amount of unrecognized tax benefits was $409 million ($339 million at December 31,
2011), of which $392 million would impact the effective tax rate, if recognized ($319 million at December 31, 2011).
Interest and penalties associated with uncertain tax positions are recognized as components of the “Provision for income
taxes,” and totaled $92 million in 2012, $21 million in 2011 and $6 million in 2010. The Company’s accrual for interest and
penalties was $131 million at December 31, 2012 and $66 million at December 31, 2011.