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

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Income Tax Expense (Benefit)

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

USD $ in millions

 
12 months ended Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
U.S. federal (82) 657  (605) 13  (132)
Non-U.S. 76  52  93  80  69 
U.S. state 11  19  (22) (137) 145 
Current tax expense (benefit) 728  (534) (44) 82 
U.S. federal 1,531  1,209  1,856  969  457 
Non-U.S. 41  (13) (8) (13) (55)
U.S. state 69  83  68  284  (88)
Deferred tax expense 1,641  1,279  1,916  1,240  314 
Income tax expense 1,646  2,007  1,382  1,196  396 

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) increased from 2011 to 2012 but then slightly declined from 2012 to 2013 not reaching 2011 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 declined from 2011 to 2012 but then increased from 2012 to 2013 not reaching 2011 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 2011 to 2012 but then slightly declined from 2012 to 2013 not reaching 2011 level.

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Effective Income Tax Rate (EITR)

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

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
U.S. federal statutory tax 35.00% 35.00% 35.00% 35.00% 35.00%
Research and development credits -4.90% 0.80% -2.70% -3.50% -10.10%
Proposed amendments to the R&E regulations -3.40% –% –% –% –%
Tax on international activities -0.10% -1.20% -0.60% -1.20% -2.40%
Tax deductible dividends -0.60% -0.70% -0.80% -0.90% -2.20%
State income tax provision, net of effect on U.S. federal tax 0.40% 0.80% 0.70% 1.80% 2.20%
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%
Effective income tax rate 26.40% 34.00% 25.60% 26.50% 22.90%

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 increased from 2011 to 2012 but then slightly declined from 2012 to 2013 not reaching 2011 level.

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Components of Deferred Tax Assets and Liabilities

Boeing Co., components of deferred tax assets and liabilities

USD $ in millions

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Retiree health care accruals 2,458  2,867  2,820  3,061  2,930 
Inventory and long-term contract methods of income recognition, fixed assets and other, net of valuation allowance (9,948) (7,151) (5,189) (2,644) (994)
Partnerships and joint ventures (62) (162) (228) (263) (528)
Other employee benefits accruals 1,773  1,427  1,352  1,272  1,411 
In-process research and development related to acquisitions 23  37  51  65  79 
Net operating loss, credit and capital loss carryovers, net of valuation allowance 362  307  488  300  477 
Pension asset 3,099  6,232  5,315  3,443  2,345 
Customer and commercial financing (990) (1,078) (1,471) (1,645) (1,703)
Unremitted earnings of non-U.S. subsidiaries (44) (49) (66) (60) (55)
Other net unrealized losses (gains) 26  (17) 69  13  66 
Net deferred tax assets (liabilities) (3,303) 2,413  3,141  3,542  4,028 

Source: Based on data from Boeing Co. Annual Reports

Item Description The company
Net deferred tax assets (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 net deferred tax assets (liabilities) declined from 2011 to 2012 and from 2012 to 2013.

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