Note 12. Income Taxes
Income tax provisions (benefits) on earnings consisted of:
The corporate statutory tax rate was 35.0% for the three years presented. A reconciliation of statutory U.S. federal income taxes to Merrill Lynch's income tax provisions for earnings follows:
- Includes adjustments to prior year accruals.
Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the Consolidated Balance Sheets. These temporary differences result in taxable or deductible amounts in future years. Details of Merrill Lynch's deferred tax assets and liabilities follow:
- Primarily related to Trading assets and Other payables.
- Related to net operating loss carryforwards not expected to be realized.
At December 29, 2000, Merrill Lynch had U.S. net operating loss carryforwards of approximately $200 million and non-U.S. net operating loss carryforwards of $1.0 billion. The U.S. amounts are primarily state carryforwards expiring in various years after 2007 and the non-U.S. amounts are primarily Japanese and U.K. carryforwards expiring in various years after 2004.
Income tax benefits of $800 million, $281 million, and $336 million were allocated to stockholders' equity related to employee compensation transactions for 2000, 1999, and 1998, respectively.
Earnings before income taxes included approximately $2,293 million, $1,447 million, and $44 million of earnings attributable to non-U.S. subsidiaries for 2000, 1999, and 1998, respectively. Cumulative undistributed earnings of non-U.S. subsidiaries were approximately $3.7 billion at December 29, 2000. No deferred U.S. federal income taxes have been provided for the undistributed earnings to the extent that they are permanently reinvested in Merrill Lynch's non-U.S. operations. It is not practicable to determine the amount of additional tax that may be payable in the event these earnings are repatriated.
