McKesson 2014 Annual Report Download - page 84

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
81
Deferred tax balances consisted of the following:
March 31,
(In millions) 2014 2013
Assets
Receivable allowances $ 106 $ 84
Deferred revenue 136 106
Compensation and benefit related accruals 641 553
Net operating loss and credit carryforwards 430 341
Other 289 281
Subtotal 1,602 1,365
Less: valuation allowance (270)(118)
Total assets 1,332 1,247
Liabilities
Inventory valuation and other assets (2,163)(2,089)
Fixed assets and systems development costs (321)(267)
Intangibles (1,531)(734)
Other (118)(24)
Total liabilities (4,133)(3,114)
Net deferred tax liability $ (2,801) $ (1,867)
Current net deferred tax asset $ 51 $ 16
Current net deferred tax liability (1,588)(1,626)
Long-term deferred tax asset 19 21
Long-term deferred tax liability (1,283)(278)
Net deferred tax liability $ (2,801) $ (1,867)
We assess the available positive and negative evidence to determine whether deferred tax assets are more likely than not to
be realized. As a result of this assessment, valuation allowances have been recorded on certain deferred tax assets in various tax
jurisdictions. The increase in valuation allowances in the current year relate primarily to net operating losses incurred in certain
tax jurisdictions for which no tax benefit was recognized and deferred tax assets that were acquired as part of the Celesio acquisition
which are not more likely than not to be realized.
We have federal, state and foreign net operating loss carryforwards of $53 million, $2,524 million and $935 million. The
federal and state net operating losses will expire at various dates from 2015 through 2034. Substantially all of our foreign net
operating losses have indefinite lives. In addition, we have Canadian research and development credit carryforwards of $11 million,
and we believe it is more likely than not that these credits will be realized. The Canadian research and development credits will
expire at various dates from 2029 to 2034.
The following table summarizes the activity related to our gross unrecognized tax benefits for the last three years:
Years Ended March 31,
(In millions) 2014 2013 2012
Unrecognized tax benefits at beginning of period $ 560 $ 595 $ 635
Additions based on tax positions related to prior years 106 46 11
Reductions based on tax positions related to prior years (31)(108)(72)
Additions based on tax positions related to current year 23 31 37
Reductions based on settlements (4)(2)(1)
Reductions based on the lapse of the applicable statutes of limitations (7)(2)(15)
Unrecognized tax benefits at end of period $ 647 $ 560 $ 595