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Notes to the Financial Statements
NOTE 3. INCOME TAXES
Components of income taxes, excluding discontinued operations, cumulative effects of changes in accounting principles and
equity in net results of affiliated companies accounted for after-tax, are as follows:
2005 2004 2003
Income/(loss) before income taxes, excluding equity in net results of affiliated companies accounted for
after-tax (in millions)
U.S. ................................................................................................................................................................
.............
$ 848 $ 3,099 $ (246)
Non-U.S. ................................................................................................................................................................
.....
852 1,501 1,501
Total................................................................................................................................................................
.......
$ 1,700 $ 4,600 $ 1,255
Provision for income taxes (in millions)
Current
Federal................................................................................................................................................................
........
$ 26 $ (119) $ (149)
Non-U.S. ................................................................................................................................................................
...
764 1,038 653
State and local................................................................................................................................
.............................
43 (148) 32
Total Current ................................................................................................................................
............................
833 771 536
Deferred
Federal................................................................................................................................................................
........
(485) 959 (209)
Non-U.S. ................................................................................................................................................................
....
(784) (804) (141)
State and local................................................................................................................................
.............................
(76) 12 (63)
Total Deferred ................................................................................................................................
..........................
(1,345) 167 (413)
Total................................................................................................................................................................
.......
$ (512) $ 938 $ 123
Reconciliation of effective tax rate
U.S. tax at statutory rate................................................................................................................................
................
35% 35% 35%
Non-U.S. income taxes ................................................................................................................................
.................
(5) (2) —
State and local income taxes ................................................................................................................................
.........
(1) 1 (2)
Deductible dividends ................................................................................................................................
....................
(9) (3) (4)
General business credits................................................................................................................................
................
(7) (3) (12)
Dispositions and restructurings ................................................................................................................................
.....
7 — —
Medicare prescription drug benefit ................................................................................................
...............................
(6) (2) —
Repatriation of foreign earnings under The American Jobs Creation Act of 2004 ................................
........................
(15) — —
Prior year settlements and claims................................................................................................................................
..
(23) (6) —
Other................................................................................................................................................................
.............
(6) — (7)
Effective rate ................................................................................................................................
............................
(30)% 20% 10%
Annual tax provisions include amounts considered sufficient to pay probable assessments for examination of prior-year tax
returns by federal, foreign, state and local jurisdictions; actual assessments may differ. We do not expect that such differences
would have a material effect on the future financial statements for a particular year, although such an outcome is possible. No
provision for deferred taxes has been made on $550 million of unremitted earnings that are considered to be indefinitely invested
in non-U.S. subsidiaries. Deferred taxes for these unremitted earnings are not practicable to estimate.
The components of deferred tax assets and liabilities at December 31 were as follows (in millions):
2005 2004
Deferred tax assets
Employee benefit plans................................................................................................................................................................
.......
$ 7,142 $ 6,005
Dealer and customer allowances and claims ................................................................................................................................
.......
3,000 3,196
Tax credit carryforwards................................................................................................................................................................
.....
2,173 2,736
Other foreign deferred tax assets................................................................................................................................
.........................
2,905 2,639
Allowance for credit losses ................................................................................................................................
................................
1,764 1,957
All other................................................................................................................................................................
..............................
6,103 5,623
Total gross deferred tax assets ................................................................................................................................
..........................
23,087 22,156
Less: valuation allowance................................................................................................................................
................................
(248) (169)
Total net deferred tax assets ................................................................................................................................
.............................
22,839 21,987
Deferred tax liabilities
Leasing transactions................................................................................................................................................................
............
7,736 7,913
Depreciation and amortization (excluding leasing transactions) ................................................................................................
.........
5,130 5,554
Finance receivables................................................................................................................................................................
.............
2,839 2,826
All other................................................................................................................................................................
..............................
6,528 6,195
Total deferred tax liabilities................................................................................................................................
..............................
22,233 22,488
Net deferred tax assets/(liabilities)................................................................................................................................
..................
$ 606 $ (501)
Ford Motor Company Annual Report 2005 64 Ford Motor Company Annual Report 2005 65