Bank of America 2005 Annual Report Download - page 183

BANK OF AMERICA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
During 2002, the Corporation reached a tax settlement agreement with the IRS. This agreement resolved issues for
numerous tax returns of the Corporation and various predecessor companies and finalized all federal income tax
liabilities, excluding those relating to FleetBoston, through 1999. As a result of the settlement, a reduction in Income
Tax Expense of $84 million in 2003 was recorded representing refunds received.
The IRS is currently examining the Corporation’s federal income tax returns for the years 2000 through 2002 as well
as the tax returns of FleetBoston and certain other subsidiaries for years ranging from 1997 to 2000. The Corporation’s
current estimate of the resolution of these various examinations is reflected in accrued income taxes; however, final
settlement of the examinations or changes in the Corporation’s estimate may result in future income tax expense or
benefit.
Significant components of the Corporation’s net deferred tax liability at December 31, 2005 and 2004 are presented
in the following table.
December 31
(Dollars in millions) 2005 2004 (Restated)
Deferred tax liabilities
Equipment lease financing ........................................................ $6,455 $6,192
Intangibles ...................................................................... 1,138 803
Investments ..................................................................... 238 1,088
State income taxes ............................................................... 168 222
Fixed assets ..................................................................... 152 47
Loan fees and expenses ........................................................... 142 —
Deferred gains and losses ......................................................... 15 251
Other ........................................................................... 1,122 874
Gross deferred tax liabilities .......................................... 9,430 9,477
Deferred tax assets
Security valuations ............................................................... 2,822 2,434
Allowance for credit losses ......................................................... 2,623 2,973
Available-for-sale securities ....................................................... 1,845 146
Accrued expenses ................................................................ 1,235 533
Employee compensation and retirement benefits ..................................... 559 648
Foreigntaxcreditcarryforward .................................................... 169 467
Loan fees and expenses ........................................................... —241
Other ........................................................................... 416 1,288
Gross deferred tax assets ...................................................... 9,669 8,730
Valuation allowance(1) ..................................................... (253) (155)
Total deferred tax assets, net of valuation allowance .............................. 9,416 8,575
Net deferred tax liabilities(2) ................................ $14 $ 902
(1) At December 31, 2004, $70 million of the valuation allowance related to gross deferred tax assets was attributable to the
FleetBoston Merger. Future recognition of the tax attributes associated with these gross deferred tax assets would result in tax
benefits being allocated to reduce Goodwill.
(2) The Corporation’s net deferred tax liabilities were adjusted during 2005 and 2004 to include $279 million of net deferred tax
liabilities and $2.0 billion of net deferred tax assets related to business combinations accounted for under the purchase method.
The valuation allowance at December 31, 2005 and 2004 is attributable to deferred tax assets generated in certain
state and foreign jurisdictions. During 2005, deferred tax assets were recognized for certain state temporary differences
that had previously not been recognized. The valuation allowance change for 2005 was primarily attributable to these
deferred tax assets, as management continues to believe it is more likely than not that realization of these assets will not
occur.
The foreign tax credit carryforward reflected in the table above represents foreign income taxes paid that are
creditable against future U.S. income taxes. If not used, these credits begin to expire after 2012 and could fully expire
after 2014.
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