Huntington National Bank 2011 Annual Report Download - page 128

Income Taxes and Deferred Tax Assets
INCOME TAXES
The calculation of our provision for income taxes is complex and requires the use of estimates and
judgments. We have two accruals for income taxes: (1) our income tax payable represents the estimated net
amount currently due to the federal, state, and local taxing jurisdictions, net of any reserve for potential audit
issues, and is reported as a component of accrued income and other assets in our consolidated balance sheet;
(2) our deferred federal income tax asset, reported as a component of accrued income and other assets, represents
the estimated impact of temporary differences between how we recognize our assets and liabilities under GAAP,
and how such assets and liabilities are recognized under the federal tax code.
In the ordinary course of business, we operate in various taxing jurisdictions and are subject to income and
non-income taxes. The effective tax rate is based in part on our interpretation of the relevant current tax laws. We
believe the aggregate liabilities related to taxes are appropriately reflected in the consolidated financial
statements. We review the appropriate tax treatment of all transactions taking into consideration statutory,
judicial, and regulatory guidance in the context of our tax positions. In addition, we rely on various tax opinions,
recent tax audits, and historical experience.
From time-to-time, we engage in business transactions that may affect our tax liabilities. Where appropriate,
we have obtained opinions of outside experts and have assessed the relative merits and risks of the appropriate
tax treatment of business transactions taking into account statutory, judicial, and regulatory guidance in the
context of the tax position. However, changes to our estimates of accrued taxes can occur due to changes in tax
rates, implementation of new business strategies, resolution of issues with taxing authorities regarding previously
taken tax positions, and newly enacted statutory, judicial, and regulatory guidance. Such changes could affect the
amount of our accrued taxes and could be material to our financial position and / or results of operations. (See
Note 17 of the Notes to Consolidated Financial Statements.)
DEFERRED TAX ASSETS
At December 31, 2011, we had a net federal deferred tax asset of $365.0 million and a net state deferred tax
liability of $0.2 million. A valuation allowance is provided when it is more-likely-than-not that some portion of
the deferred tax asset will not be realized. All available evidence, both positive and negative, was considered to
determine whether, based on the weight of that evidence, impairment should be recognized. Our forecast process
includes judgmental and quantitative elements that may be subject to significant change. If our forecast of
taxable income within the carryforward periods available under applicable law is not sufficient to cover the
amount of net deferred tax assets, such assets may be impaired. Based on our analysis of both positive and
negative evidence and our ability to offset the net deferred tax assets against our forecasted future taxable
income, there was no impairment of the deferred tax assets at December 31, 2011.
Recent Accounting Pronouncements and Developments
Note 2 to Consolidated Financial Statements discusses new accounting pronouncements adopted during
2011 and the expected impact of accounting pronouncements recently issued but not yet required to be adopted.
To the extent the adoption of new accounting standards materially affect financial condition, results of
operations, or liquidity, the impacts are discussed in the applicable section of this MD&A and the Notes to
Consolidated Financial Statements.
Acquisitions
Sky Financial
The merger with Sky Financial was completed on July 1, 2007. At the time of acquisition, Sky Financial had
assets of $16.8 billion, including $13.3 billion of loans, and total deposits of $12.9 billion. The impact of this
acquisition was included in our consolidated results for the last six months of 2007.
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