BB&T 2007 Annual Report Download - page 107

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BB&T CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The tax effects of temporary differences that gave rise to significant portions of the net deferred tax assets
(liabilities) included in other liabilities on the “Consolidated Balance Sheets” were:
December 31,
2007 2006
(Dollars in millions)
Deferred tax assets:
Allowance for loan and lease losses $ 375 $ 335
Unrealized loss on securities available for sale 17 142
Postretirement plans 48 70
Equity-based compensation 48 10
Other 106 74
Total deferred tax assets 594 631
Deferred tax liabilities:
Lease financing (86) (1,228)
Prepaid pension plan expense (144) (71)
Loan fees & expenses (138) (70)
Identifiable intangible assets (110) (113)
Loan servicing rights (101) (135)
Unamortized FHLB loan prepayment fees (127) (174)
Other (105) (68)
Total deferred tax liabilities (811) (1,859)
Net deferred tax liabilities $(217) $(1,228)
On a periodic basis, BB&T evaluates its income tax positions based on tax laws and regulations and financial
reporting considerations, and records adjustments as appropriate. This evaluation takes into consideration the
status of current taxing authorities’ examinations of BB&T’s tax returns, recent positions taken by the taxing
authorities on similar transactions, if any, and the overall tax environment in relation to tax-advantaged
transactions. Detailed below is a reconciliation of BB&T’s unrecognized tax benefits for the year ended
December 31, 2007. The amounts presented in the reconciliation are gross of any related tax benefits.
Unrecognized Tax
Benefits
(Dollars in millions)
Balance January 1, 2007 $ 1,257
Current activity:
Additions based on tax positions related to current year 14
Additions for tax positions of prior years 5
Reductions for tax positions of prior years (1,018)
Settlements (39)
Balance December 31, 2007 $ 219
As of January 1, 2007 and December 31, 2007, BB&T had recorded $181 million and $168 million respectively
of unrecognized federal and state tax benefits, which would have reduced the effective tax rate if recognized. In
addition, the Company had $209 million and $30 million in liabilities for tax-related interest and penalties
recorded on its Consolidated Balance Sheets at January 1, 2007 and December 31, 2007 respectively. Total
interest, net of the federal benefit, recognized in the 2007 Consolidated Statement of Income was $12 million.
BB&T classifies interest and penalties related to income taxes as a component of the provision for income taxes in
the Consolidated Statements of Income.
107