Visa 2012 Annual Report Download - page 103

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Table of Contents VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2012
The tax effect of temporary differences that give rise to significant portions of deferred tax assets and liabilities at
September 30, 2012 and 2011 , are presented below:
Total net deferred tax assets and liabilities are included in the Company’s consolidated balance sheets as follows:
The increase in the deferred tax asset for accrued litigation obligation is primarily due to the covered litigation provision in
fiscal 2012. The decrease in the Company's deferred tax liabilities is primarily due to the one-time, non-cash remeasurement as a
result of changes in California state apportionment rules in fiscal 2012.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that all or some
portion of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary differences are deductible. The fiscal 2012
valuation allowance relates primarily to foreign net operating losses from subsidiaries acquired in recent years.
As of September 30, 2012 , the Company had $20 million federal, $116 million state and $70 million
foreign net operating loss
carryforwards. The federal and state net operating loss carryforwards will expire in fiscal 2021 through 2031 . The foreign net
operating loss may be carried forward indefinitely. 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
100
2012
2011
(in millions)
Deferred Tax Assets
Accrued compensation and benefits
$
103
$
96
Comprehensive income
102
104
Investments in joint ventures
11
15
Accrued litigation obligation
1,654
128
Client incentives
227
184
Net operating loss carryforward
33
38
Tax credits
23
26
Federal benefit of state taxes
90
300
Federal benefit of foreign taxes
16
7
Other
92
76
Valuation allowance
(13
)
—
Deferred tax assets
2,338
974
Deferred Tax Liabilities
Property, equipment and technology, net
(288
)
(266
)
Intangible assets
(4,027
)
(4,374
)
Foreign taxes
(44
)
(40
)
Other
(10
)
(10
)
Deferred tax liabilities
(4,369
)
(4,690
)
Net deferred tax liabilities
$
(2,031
)
$
(3,716
)
September 30,
2012
September 30,
2011
(in millions)
Current deferred tax assets
$
2,027
$
489
Non-current deferred tax liabilities
(4,058
)
(4,205
)
Net deferred tax liabilities
$
(2,031
)
$
(3,716
)