Freddie Mac 2015 Annual Report Download - page 283

Financial Statements Notes to the Consolidated Financial Statements | Note 11
Freddie Mac 2015 Form 10-K 281
consequences of existing temporary differences between the financial reporting and the tax reporting
basis of assets and liabilities using enacted statutory tax rates as well as tax net operating loss and tax
credit carryforwards. To the extent tax laws change, deferred tax assets and liabilities are adjusted in the
period that the tax change is enacted. The realization of these net deferred tax assets is dependent upon
the generation of sufficient taxable income.
The table below presents the balance of significant deferred tax assets and liabilities at December 31,
2015 and 2014.
(in millions) 2015 2014
Deferred tax assets:
Deferred fees $7,008 $6,245
Basis differences related to derivative instruments 5,912 7,059
Credit related items and allowance for loan losses 170 2,311
Basis differences related to assets held for investment 3,303 1,902
LIHTC and AMT credit carryforward 2,764 3,465
Other items, net 81 10
Total deferred tax assets 19,238 20,992
Deferred tax liabilities:
Unrealized gains related to available-for-sale securities (937)(1,371)
Basis differences related to debt (96)(123)
Total deferred tax liabilities (1,033)(1,494)
Deferred tax assets, net $ 18,205 $ 19,498
As of December 31, 2015, we had a LIHTC carryforward of $2.3 billion that will expire over multiple years
beginning in 2030. Our AMT credit carryforward of $433 million will not expire.
Valuation Allowance
Valuation allowances are recorded to reduce net deferred tax assets when it is more likely than not that all
or part of our tax benefits will not be realized. On a quarterly basis, we determine whether a valuation
allowance is necessary on our net deferred tax asset. In doing so, we consider all evidence available,
both positive and negative, in determining whether, based on the weight of the evidence, it is more likely
than not that the deferred tax assets will be realized.
We are not permitted to consider the impacts proposed legislation may have on our business operations
or the mortgage industry in our analysis because the timing and certainty of those actions are unknown
and beyond our control.
At December 31, 2015, we determined that the positive evidence, particularly the evidence that was
objectively verifiable, outweighed the negative evidence.
The positive evidence included the following:
• Our three-year cumulative income position and taxable income for the past three years;
• Our current loss carryback capacity and the length of the carryforward period available to utilize our
tax credit carryforward under current tax law;
• Our access to capital under the agreements associated with conservatorship; and
• Our expected 2015 taxable income and forecasts of future book income.