Boeing Co. (BA) | Income Taxes

Income Tax Accounting Policy

Provisions for federal, state, and non-U.S. income taxes are calculated on reported Earnings before income taxes based on current tax law and also include, in the current period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Such provisions differ from the amounts currently receivable or payable because certain items of income and expense are recognized in different time periods for financial reporting purposes than for income tax purposes. Significant judgment is required in determining income tax provisions and evaluating tax positions.

The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. Boeing records a liability for the difference between the benefit recognized and measured for financial statement purposes and the tax position taken or expected to be taken on tax return. To the extent that Boeing's assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. Tax-related interest and penalties are classified as a component of Income tax expense.

Source: Boeing Co., Annual Report

Income Tax Expense (Benefit)

Boeing Co., income tax expense (benefit), continuing operations

USD $ in millions

12 months ended	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
U.S. federal	657	(605)	13	(132)	44
Non-U.S.	52	93	80	69	29
U.S. state	19	(22)	(137)	145	20
Current tax expense (benefit)	728	(534)	(44)	82	93
U.S. federal	1,209	1,856	969	457	1,151
Non-U.S.	(13)	(8)	(13)	(55)	26
U.S. state	83	68	284	(88)	71
Deferred tax expense	1,279	1,916	1,240	314	1,248
Income tax expense	2,007	1,382	1,196	396	1,341

Source: Based on data from Boeing Co. Annual Reports

Item	Description	The company
Current tax expense (benefit)	The component of income tax expense for the period representing amounts of income taxes paid or payable (or refundable) for the period for all income tax obligations as determined by applying the provisions of relevant enacted tax laws to relevant amounts of taxable income (loss) from continuing operations.	Boeing Co.'s current tax expense (benefit) declined from 2010 to 2011 but then increased from 2011 to 2012 exceeding 2010 level.
Deferred tax expense	The component of income tax expense for the period representing the net change in the entity's deferred tax assets and liabilities pertaining to continuing operations.	Boeing Co.'s deferred tax expense increased from 2010 to 2011 but then slightly declined from 2011 to 2012 not reaching 2010 level.
Income tax expense	The sum of the current income tax expense (benefit) and the deferred income tax expense (benefit) pertaining to pretax income (loss) from continuing operations; income tax expense (benefit) may include interest and penalties on tax uncertainties based on the entity's accounting policy.	Boeing Co.'s income tax expense increased from 2010 to 2011 and from 2011 to 2012.

Effective Income Tax Rate (EITR)

Boeing Co., effective income tax rate (EITR) reconciliation

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
U.S. federal statutory tax	35.00%	35.00%	35.00%	35.00%	35.00%
Research and development credits	0.80%	-2.70%	-3.50%	-10.10%	-4.30%
Tax on international activities	-1.20%	-0.60%	-1.20%	-2.40%	-0.70%
Tax deductible dividends	-0.70%	-0.80%	-0.90%	-2.20%	-0.80%
State income tax provision, net of effect on U.S. federal tax	0.80%	0.70%	1.80%	2.20%	1.70%
Medicare Part D law change	–%	–%	3.30%	–%	–%
Federal audit settlement	–%	-7.40%	-8.20%	–%	–%
Other provision adjustments	-0.70%	1.40%	0.20%	0.40%	2.70%
Effective income tax rate	34.00%	25.60%	26.50%	22.90%	33.60%

Source: Based on data from Boeing Co. Annual Reports

Item	Description	The company
Effective income tax rate	A ratio calculated by dividing the reported amount of income tax expense attributable to continuing operations for the period by GAAP-basis pretax income from continuing operations.	Boeing Co.'s effective income tax rate declined from 2010 to 2011 but then increased from 2011 to 2012 exceeding 2010 level.

Components of Deferred Tax Assets and Liabilities

Boeing Co., components of deferred tax assets and liabilities

USD $ in millions

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Retiree health care accruals	2,867	2,820	3,061	2,930	2,970
Inventory and long-term contract methods of income recognition, fixed assets and other (net of valuation allowance)	(7,151)	(5,189)	(2,644)	(994)	(604)
Partnerships and joint ventures	(162)	(228)	(263)	(528)	(500)
Other employee benefits accruals	1,427	1,352	1,272	1,411	1,367
In-process research and development related to acquisitions	37	51	65	79	93
Net operating loss, credit and capital loss carryovers (net of valuation allowance)	307	488	300	477	270
Pension asset (liabilities)	6,232	5,315	3,443	2,345	3,026
Customer and commercial financing	(1,078)	(1,471)	(1,645)	(1,703)	(1,604)
Unremitted earnings of non-U.S. subsidiaries	(49)	(66)	(60)	(55)	(55)
Other net unrealized losses (gains)	(17)	69	13	66	197
Deferred tax assets, net of deferred tax liabilities	2,413	3,141	3,542	4,028	5,160

Source: Based on data from Boeing Co. Annual Reports

Item	Description	The company
Deferred tax assets, net of deferred tax liabilities	For entities that net deferred tax assets and tax liabilities, represents the unclassified net amount of deferred tax assets and liabilities as of the balance sheet date, which result from applying the applicable enacted tax rate to net temporary differences and carryforwards pertaining to assets or liabilities. A temporary difference is a difference between the tax basis of an asset or liability and its carrying amount in the financial statements prepared in accordance with generally accepted accounting principles that will reverse in ensuing periods.	Boeing Co.'s deferred tax assets, net of deferred tax liabilities declined from 2010 to 2011 and from 2011 to 2012.