Goldman Sachs 2007 Annual Report Download - page 133

Download and view the complete annual report

Please find page 133 of the 2007 Goldman Sachs annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 154

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154

Notes to Consolidated Financial Statements
During 2007, the valuation allowance was increased by
$31 million, primarily due to an increase in deferred tax assets
relating to net operating losses considered more likely than not to
expire unused. Net operating loss carryforwards were $2.12 billion
and $1.78 billion as of November 2007 and November 2006,
respectively.
NOTE 14
Income Taxes
The components of the net tax expense reflected in the consolidated statements of earnings are set forth below:
Year Ended November
(in millions) 2007 2006 2005
Current taxes
U.S. federal $2,934 $ 3,736 $1,504
State and local 388 627 213
Non-U.S. 2,554 2,165 1,380
Total current tax expense 5,876 6,528 3,097
Deferred taxes
U.S. federal 118 (635) 3
State and local 100 (262) (4)
Non-U.S. (89) (608) (449)
Total deferred tax (benefit)/expense 129 (1,505) (450)
Net tax expense $6,005 $ 5,023 $2,647
Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets
and liabilities. These temporary differences result in taxable or deductible amounts in future years and are measured using the
tax rates and laws that will be in effect when such differences are expected to reverse.
Significant components of the firm’s deferred tax assets and liabilities are set forth below:
As of November
(in millions) 2007 2006
Deferred tax assets
Compensation and benefits $3,869 $2,763
Other, net 997 1,104
4,866 3,867
Valuation allowance
(1)
(112) (81)
Total deferred tax assets $4,754 $3,786
Deferred tax liabilities
Depreciation and amortization $1,208 $1,040
Unrealized gains 1,279 367
Total deferred tax liabilities $2,487 $1,407
(1) Relates primarily to the ability to utilize losses in various tax jurisdictions.
The firm permanently reinvests eligible earnings of certain
foreign subsidiaries and, accordingly, does not accrue any U.S.
income taxes that would arise if such earnings were repatriated.
As of November 2007, this policy resulted in an unrecognized net
deferred tax liability of $350 million attributable to reinvested
earnings of $4.97 billion.
131Goldman Sachs 2007 Annual Report