US Bank 2012 Annual Report Download - page 123

2011 and 2010 the Company recorded approximately $(8)
million, $(2) million and $(6) million, respectively, in interest
on unrecognized tax positions.
Deferred income tax assets and liabilities reflect the tax
effect of estimated temporary differences between the carrying
amounts of assets and liabilities for financial reporting
purposes and the amounts used for the same items for income
tax reporting purposes.
The significant components of the Company’s net deferred tax asset (liability) as of December 31 were:
(Dollars in Millions) 2012 2011
Deferred Tax Assets
Allowance for credit losses .............................................................................................. $ 1,756 $ 1,872
Pension and postretirement benefits .................................................................................... 523 281
Accrued expenses ....................................................................................................... 476 399
Stock compensation .................................................................................................... 183 203
Federal, state and foreign net operating loss carryforwards ............................................................. 60 26
Securities available-for-sale and financial instruments .................................................................. – 85
Partnerships and other investment assets ............................................................................... 395 571
Other deferred tax assets, net ........................................................................................... 180 96
Gross deferred tax assets ............................................................................................ 3,573 3,533
Deferred Tax Liabilities
Leasing activities ........................................................................................................ (2,792) (3,048)
Goodwill and other intangible assets .................................................................................... (565) (517)
Mortgage servicing rights ............................................................................................... (490) (522)
Securities available-for-sale and financial instruments .................................................................. (232) –
Loans .................................................................................................................... (168) (175)
Fixed assets ............................................................................................................. (201) (169)
Other deferred tax liabilities, net ......................................................................................... (361) (176)
Gross deferred tax liabilities .......................................................................................... (4,809) (4,607)
Valuation allowance ..................................................................................................... (84) (51)
Net Deferred Tax Asset (Liability) .......................................................................................... $(1,320) $(1,125)
The Company has approximately $723 million of federal,
state and foreign net operating loss carryforwards which
expire at various times through 2032. Limitations on the
ability to realize these carryforwards is reflected in the
associated valuation allowance. Management has determined
it is more likely than not the other net deferred tax assets
could be realized through carry back to taxable income in
prior years, future reversals of existing taxable temporary
differences and future taxable income.
At December 31, 2012, retained earnings included
approximately $102 million of base year reserves of acquired
thrift institutions, for which no deferred federal income tax
liability has been recognized. These base year reserves would
be recaptured if the Company’s banking subsidiaries cease to
qualify as a bank for federal income tax purposes. The base
year reserves also remain subject to income tax penalty
provisions that, in general, require recapture upon certain
stock redemptions of, and excess distributions to,
stockholders.
NOTE 19 Derivative Instruments
The Company recognizes all derivatives in the Consolidated
Balance Sheet at fair value in other assets or in other
liabilities. On the date the Company enters into a derivative
contract, the derivative is designated as either a hedge of the
fair value of a recognized asset or liability (“fair value
hedge”); a hedge of a forecasted transaction or the variability
of cash flows to be paid related to a recognized asset or
liability (“cash flow hedge”); a hedge of the volatility of an
investment in foreign operations driven by changes in foreign
currency exchange rates (“net investment hedge”); or a
designation is not made as it is a customer-related transaction,
an economic hedge for asset/liability risk management
purposes or another stand-alone derivative created through
the Company’s operations (“free-standing derivative”).
U.S. BANCORP 119