Apple 2013 Annual Report Download - page 66

Note 5 – Income Taxes
The provision for income taxes for 2013, 2012 and 2011, consisted of the following (in millions):
2013 2012 2011
Federal:
Current ....................................................... $ 9,334 $ 7,240 $ 3,884
Deferred ...................................................... 1,878 5,018 2,998
11,212 12,258 6,882
State:
Current ....................................................... 1,084 1,182 762
Deferred ...................................................... (311) (123) 37
773 1,059 799
Foreign:
Current ....................................................... 1,559 1,203 769
Deferred ...................................................... (426) (490) (167)
1,133 713 602
Provision for income taxes ............................................ $13,118 $14,030 $ 8,283
The foreign provision for income taxes is based on foreign pre-tax earnings of $30.5 billion, $36.8 billion and
$24.0 billion in 2013, 2012 and 2011, respectively. The Company’s consolidated financial statements provide for
any related tax liability on undistributed earnings that the Company does not intend to be indefinitely reinvested
outside the U.S. Substantially all of the Company’s undistributed international earnings intended to be
indefinitely reinvested in operations outside the U.S. were generated by subsidiaries organized in Ireland, which
has a statutory tax rate of 12.5%. As of September 28, 2013, U.S. income taxes have not been provided on a
cumulative total of $54.4 billion of such earnings. The amount of unrecognized deferred tax liability related to
these temporary differences is estimated to be approximately $18.4 billion.
As of September 28, 2013 and September 29, 2012, $111.3 billion and $82.6 billion, respectively, of the
Company’s cash, cash equivalents and marketable securities were held by foreign subsidiaries and are generally
based in U.S. dollar-denominated holdings. Amounts held by foreign subsidiaries are generally subject to U.S.
income taxation on repatriation to the U.S.
A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal
income tax rate (35% in 2013, 2012 and 2011) to income before provision for income taxes for 2013, 2012 and
2011, is as follows (in millions):
2013 2012 2011
Computed expected tax .............................................. $17,554 $19,517 $11,973
State taxes, net of federal effect ........................................ 508 677 552
Indefinitely invested earnings of foreign subsidiaries ....................... (4,614) (5,895) (3,898)
Research and development credit, net ................................... (287) (103) (167)
Domestic production activities deduction ................................ (308) (328) (168)
Other ............................................................. 265 162 (9)
Provision for income taxes ........................................ $13,118 $14,030 $ 8,283
Effective tax rate ............................................... 26.2% 25.2% 24.2%
The Company’s income taxes payable have been reduced by the tax benefits from employee stock plan awards.
For stock options, the Company receives an income tax benefit calculated as the tax effect of the difference
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