American Express 1998 Annual Report Download - page 53

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51
(millions) 1998 1997 1996
Current $ 883 $824 $846
Deferred (99) (65) (83)
Total $ 784 $759 $763
(millions) 1998 1997
Deferred tax assets $ 2,921 $ 2,767
Deferred tax liabilities 1,680 1,609
Net deferred tax assets $ 1,241 $ 1,158
The Company’s net deferred tax assets at December 31 were:
No. 115 of $320 million and $318 million, respectively;
and accelerated depreciation of $158 million and $150
million, respectively.
The principal reasons that the aggregate income tax
provision is different from that computed by using the
U.S. statutory rate of 35 percent are:
Deferred tax assets primarily reflect: reserves not yet
deducted for tax purposes of $1.8 billion for both years
and deferred Cardmember fees of $225 million and
$238 million at December 31, 1998 and 1997, respec-
tively. Deferred tax liabilities for 1998 and 1997 mainly
comprise deferred acquisition costs of $853 million and
$826 million, respectively; liabilities related to SFAS
The provisions for income taxes were:
(millions) 1998 1997 1996
Federal $ 465 $453 $468
State and local 35 46 74
Foreign 284 260 221
Total $ 784 $759 $763
aggregated $249 million, have not been provided on
those earnings.
The current and deferred components of the pro-
vision for income taxes were:
Accumulated net earnings of certain foreign subsidiaries,
which totaled $1.2 billion at December 31, 1998, are
intended to be permanently reinvested outside the United
States. Accordingly, federal taxes, which would have
NOTE 12 INCOME TAXES
(millions) 1998 1997 1996
Combined tax at U.S. statutory rate $ 1,024 $962 $ 933
Changes in taxes resulting from:
Tax-exempt interest income (122) (132) (153)
Tax-exempt element of dividend income (38) (22) (22)
Foreign income taxed at rates other than
U.S. statutory rate (44) (13) (35)
State and local income taxes 23 29 47
All other (59) (65) (7)
Income tax provision $ 784 $759 $ 763
Net income taxes paid by the Company during 1998, 1997
and 1996 were $977 million, $878 million and $548 mil-
lion, respectively, and include estimated tax payments and
cash settlements relating to prior tax years.
The items composing comprehensive income in the
Consolidated Statements of Shareholders’ Equity are
presented net of income tax provision (benefit). The
changes in net unrealized securities gains are presented
net of tax provision (benefit) of $2 million, $104 mil-
lion and ($263 million) for 1998, 1997 and 1996,
respectively. Foreign currency translation adjustments
are presented net of tax (benefits) of ($8 million),
($4 million) and ($2 million) for 1998, 1997 and
1996, respectively.