Income Tax Accounting Policy
Income tax expense is based on reported income before income taxes. Deferred income taxes reflect the tax effect of temporary differences between asset and liability amounts that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. These deferred taxes are measured by applying currently enacted tax laws. Valuation allowances are recognized to reduce deferred tax assets to the amount that will more likely than not be realized. In assessing the need for a valuation allowance, management considers all available evidence for each jurisdiction including past operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies. When IBM changes its determination as to the amount of deferred tax assets that can be realized, the valuation allowance is adjusted with a corresponding impact to income tax expense in the period in which such determination is made.
IBM recognizes tax liabilities when, despite IBM's belief that its tax return positions are supportable, IBM believes that certain positions may not be fully sustained upon review by tax authorities. Benefits from tax positions are measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. The current portion of tax liabilities is included in taxes and the noncurrent portion of tax liabilities is included in other liabilities in the Consolidated Statement of Financial Position. To the extent that new information becomes available which causes IBM to change its judgment regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense.
Source: International Business Machines Corp., Annual Report
Income Tax Expense (Benefit)
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International Business Machines Corp., income tax expense (benefit), continuing operations
Source: Based on data from International Business Machines Corp. Annual Reports
| Item |
Description |
The company |
| Current |
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. |
International Business Machines Corp.'s current increased from 2009 to 2010 and from 2010 to 2011.
|
| Deferred |
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. |
International Business Machines Corp.'s deferred declined from 2009 to 2010 and from 2010 to 2011.
|
| Provision for income taxes |
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. |
International Business Machines Corp.'s provision for income taxes increased from 2009 to 2010 and from 2010 to 2011.
|
Effective Income Tax Rate (EITR)
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International Business Machines Corp., effective income tax rate (EITR) reconciliation
Source: Based on data from International Business Machines Corp. Annual Reports
| Item |
Description |
The company |
| Effective 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. |
|
Deferred Tax Assets (Liabilities), Net
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International Business Machines Corp., deferred tax assets (liabilities), net
Source: Based on data from International Business Machines Corp. Annual Reports
| Item |
Description |
The company |
| Gross deferred tax assets |
The sum of the tax effects as of the balance sheet date of the amounts of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws (before the valuation allowance, if any, to reduce such sum amount to net realizable value). Includes any tax benefit realized in deferred tax assets for significant impacts of tax planning strategies. |
International Business Machines Corp.'s gross deferred tax assets declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
| Net deferred tax assets |
The aggregate tax effects as of the balance sheet date of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws; net of deducting the allocated valuation allowance, if any, to reduce such amount to net realizable value. |
International Business Machines Corp.'s net deferred tax assets declined from 2009 to 2010 but then increased from 2010 to 2011 not reaching 2009 level.
|
| 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. |
International Business Machines Corp.'s net deferred tax assets (liabilities) declined from 2009 to 2010 but then slightly increased from 2010 to 2011.
|
