Visa 2010 Annual Report Download - page 123

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2010
(in millions, except as noted)
As of September 30, 2010, the Company had $217 million federal and $137 million state net operating loss carryforwards from CyberSource available
to reduce future taxable income. The federal and state net operating loss carryforwards will expire in fiscal 2013 through 2029. Internal Revenue Code
Section 382 imposes substantial restrictions on the utilization of net operating losses and tax credits in the event of a corporation's ownership change, as
defined in the Internal Revenue Code. Although the Company's ability to utilize the net operating loss carryforwards was limited in fiscal 2010, the Company
expects to fully utilize the net operating loss carryforwards in future years.
As of September 30, 2010, the Company also had federal and state research and development tax credit carryforwards of $6 million and $21 million,
respectively. The federal carryforwards will expire in fiscal 2017 through 2028. The state carryforwards can be carried forward indefinitely. The Company
also has federal alternative minimum tax credits of approximately $1 million, which do not expire. The Company expects to realize the benefit of the credit
carryforwards in future years.
The income tax expense differs from the amount of income tax determined by applying the applicable U.S. federal statutory rate of 35% to pretax
income, as a result of the following:
For the Years Ended September 30
2010 2009 2008
Dollars Percent Dollars Percent Dollars Percent
(in millions)
U.S. federal income tax at statutory rate $ 1,623 35% $ 1,400 35% $ 467 35%
State income taxes, net of federal benefit 177 4% 156 4% 43 3%
Non-U.S. tax effect, net of federal benefit (124) (2)% 7 — 13 1%
Reserve for tax uncertainties related to litigation 2 — 4 — 103 8%
Other, net 9 — 30 1% 21 2%
Remeasurement of deferred taxes due to change in state apportionment 15 — — — (115) (9)%
Non-U.S. tax on sale of VisaNet do Brasil, net of federal benefit — — 51 1% — —
Revaluation of Visa Europe put option (28) (1)% — — — —
Income tax expense $ 1,674 36% $ 1,648 41% $ 532 40%
The difference between the effective income tax rates for fiscal 2009 and fiscal 2010 is primarily due to changes in the geographic mix of the
Company's global income; the benefit of tax incentives in Singapore, the Company's largest operating hub outside the U.S.; the nontaxable revaluation of the
Visa Europe put option in fiscal 2010; and the additional foreign tax related to the sale of the investment in VisaNet do Brasil in fiscal 2009.
The effective income tax rate for fiscal 2009 differs from that for fiscal 2008 primarily due to the additional non-U.S. tax in fiscal 2009 on the sale of
the investment in VisaNet do Brasil, the litigation tax reserves in fiscal 2008, and a rate reduction in fiscal 2008 from the combined effect of the loss of a
California special deduction upon IPO and the deferred tax remeasurement benefit from the change in state tax apportionment.
Income taxes receivable of $140 million and $135 million are included in prepaid and other current assets at September 30, 2010 and 2009,
respectively. See Note 7—Prepaid Expenses and Other Assets. At September 30, 2010 and 2009, income taxes payable of $40 million and $23 million,
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