Bank of America 2012 Annual Report Download - page 253

Bank of America 2012 251
NOTE 20 Income Taxes
The components of income tax expense (benefit) for 2012, 2011
and 2010 are presented in the table below.
Income Tax Expense (Benefit)
(Dollars in millions) 2012 2011 2010
Current income tax expense (benefit)
U.S. federal $ 458 $ (733) $ (666)
U.S. state and local 592 393 158
Non-U.S. 569 613 815
Total current expense 1,619 273 307
Deferred income tax expense (benefit)
U.S. federal (3,433) (2,673) (287)
U.S. state and local (55) (584) 201
Non-U.S. 753 1,308 694
Total deferred expense (benefit) (2,735) (1,949) 608
Total income tax expense (benefit) $ (1,116) $ (1,676) $ 915
Total income tax expense (benefit) does not reflect the deferred
tax effects of unrealized gains and losses on AFS debt and
marketable equity securities, foreign currency translation
adjustments, derivatives and employee benefit plan adjustments
that are included in accumulated OCI. As a result of these tax
effects, accumulated OCI decreased $1.3 billion and $3.2 billion
in 2012 and 2010, and increased $2.9 billion in 2011. In addition,
total income tax expense (benefit) does not reflect tax effects
associated with the Corporation’s employee stock plans which
decreased common stock and additional paid-in capital $277
million and $98 million in 2012 and 2010, and increased common
stock and additional paid-in capital $19 million in 2011.
Income tax expense (benefit) for 2012, 2011 and 2010 varied
from the amount computed by applying the statutory income tax
rate to income (loss) before income taxes. A reconciliation of the
expected U.S. federal income tax expense applying the federal
statutory tax rate of 35 percent to the Corporation’s actual income
tax expense (benefit) and resulting effective tax rate for 2012,
2011 and 2010 are presented in the Reconciliation of Income Tax
Expense (Benefit) table.
Reconciliation of Income Tax Expense (Benefit)
2012 2011 2010
(Dollars in millions) Amount Percent Amount Percent Amount Percent
Expected U.S. federal income tax expense (benefit) $ 1,075 35.0 % $ (81) 35.0 % $ (463) 35.0 %
Increase (decrease) in taxes resulting from: (1)%
State tax expense (benefit), net of federal effect 349 11.4 (124) 233 (17.6)
Non-U.S. tax differential (1) (1,968) (64.1) (383) (190) 14.4
Low-income housing credits/other credits (783) (25.5) (800) (732) 55.4
Tax-exempt income, including dividends (576) (18.8) (614) (981) 74.2
Changes in prior period UTBs (including interest) (198) (6.4) (239) (349) 26.4
Non-U.S. statutory rate reductions 788 25.7 860 392 (29.7)
Nondeductible expenses 231 7.5 119 99 (7.5)
Leveraged lease tax differential 83 2.7 121 98 (7.4)
Change in federal and non-U.S. valuation allowances 41 1.3 (1,102) (1,657) 125.4
Goodwill – impairment and other —— 1,420 4,508 (341.0)
Subsidiary sales and liquidations —— (823) ——
Other (158) (5.1) (30) (43) 3.2
Total income tax expense (benefit) $ (1,116) (36.3)% $ (1,676) n/m $ 915 (69.2)%
(1) Includes in 2012, $1.7 billion income tax benefit attributable to the excess of foreign tax credits recognized in the U.S. upon repatriation of the earnings of certain non-U.S. subsidiaries over the
related U.S. tax liability.
n/m = not meaningful
The reconciliation of the beginning unrecognized tax benefits (UTB) balance to the ending balance is presented in the table below.
Reconciliation of the Change in Unrecognized Tax Benefits
(Dollars in millions) 2012 2011 2010
Beginning balance $ 4,203 $ 5,169 $ 5,253
Increases related to positions taken during the current year 352 219 172
Increases related to positions taken during prior years (1) 142 879 755
Decreases related to positions taken during prior years (1) (711)(1,669) (657)
Settlements (205)(277) (305)
Expiration of statute of limitations (104)(118) (49)
Ending balance $ 3,677 $ 4,203 $ 5,169
(1) The sum per year of positions taken during prior years differs from the $198 million, $239 million and $349 million in the Reconciliation of Income Tax Expense (Benefit) table due to temporary
items and jurisdictional offsets, as well as the inclusion of interest in the Reconciliation of Income Tax Expense (Benefit) table.