Ford 2010 Annual Report Download - page 158

Notes to the Financial Statements
156 Ford Motor Company | 2010 Annual Report
NOTE 23. INCOME TAXES (Continued)
Components of Deferred Tax Assets and Liabilities
The components of deferred tax assets and liabilities at December 31 were as follows (in millions):
2010
20102010
2010
2009
20092009
2009
Deferred tax asse
Deferred tax asseDeferred tax asse
Deferred tax assets
tsts
ts
Employee benefit plans................................................................................................
................................
$ 6,332 $ 8,590
Net operating loss carryforwards................................................................................................
................................
4,124 1,901
Tax credit carryforwards................................................................................................
................................
4,546 2,941
Research expenditures ................................................................................................
................................
2,336 2,477
Dealer and customer allowances and claims ................................................................
................................
1,428 1,960
Other foreign deferred tax assets................................................................................................
................................
1,513 6,441
Allowance for credit losses................................................................................................
................................
252 529
All other................................................................................................................................
................................
2,839 2,347
Total gross deferred tax assets................................................................................................
................................
23,370 27,186
Less: valuation allowance ................................................................................................
................................
(15,664) (17,396)
Total net deferred tax assets ................................................................................................
................................
7,706 9,790
Deferred tax liabil
Deferred tax liabilDeferred tax liabil
Deferred tax liabilities
itiesities
ities
Leasing transactions ................................................................................................................................
....................
928 1,411
Deferred income ................................................................................................................................
..........................
2,101 —
Depreciation and amortization (excluding leasing transactions)................................................................
...................
1,146 3,080
Finance receivables ................................................................................................................................
.....................
716 719
Other foreign deferred tax liabilities................................................................................................
..............................
334 1,240
All other................................................................................................................................
................................
1,613 2,282
Total deferred tax liabilities................................................................................................
................................
6,838 8,732
Net deferred tax assets/(liabilities) ................................................................................................
...........................
$ 868 $ 1,058
Operating loss carryforwards for tax purposes were $10.3 billion at December 31, 2010. A substantial portion of these
losses begin to expire in 2029; the remaining losses will begin to expire in 2018. Capital loss carryforwards for tax
purposes were $415 million at December 31, 2010. Tax credits available to offset future tax liabilities are $4.5 billion. A
substantial portion of these credits have a remaining carryforward period of 10 years or more. Tax benefits of operating
loss and tax credit carryforwards are evaluated on an ongoing basis, including a review of historical and projected future
operating results, the eligible carryforward period, and other circumstances.
Effective September 30, 2006, the balance of deferred taxes primarily at our U.S. entities changed from a net deferred
tax liability position to a net deferred tax asset position. Due to the cumulative losses we have incurred at these
operations and their near-term financial outlook, at December 31, 2010 we have a valuation allowance of $15.7 billion
against the net deferred tax asset.
Tax Benefits Preservation Plan
On September 11, 2009, our Board of Directors adopted a tax benefit preservation plan designed to preserve
shareholder value and the value of certain tax assets including net operating losses, capital losses, and tax credit
carryforwards ("Tax Attributes"). At December 31, 2010, we had Tax Attributes that would offset $20 billion of U.S. taxable
income. Our ability to use these Tax Attributes would be substantially limited if there were an "ownership change" as
defined under Section 382 of the Internal Revenue Code. In general, an ownership change would occur if 5-percent
shareholders (as defined under U.S. federal income tax laws) collectively increase their ownership in Ford by more than
50 percentage points over a rolling three-year period.
In connection with the tax benefit preservation plan, our Board of Directors declared a dividend of one preferred share
purchase right for each share of Ford Common Stock and Class B Stock outstanding as of the close of business on
September 25, 2009. In accordance with the Plan, shares held by any person who acquires, without the approval of our
Board of Directors, beneficial ownership of 4.99% or more of outstanding Ford Common Stock (including any ownership
interest held by that person's affiliates and associates as defined under the tax benefit preservation plan) could be subject
to significant dilution.