Income Tax Accounting Policy
McDonald's Corp., like other multi-national companies, is regularly audited by federal, state and foreign tax authorities, and tax assessments may arise several years after tax returns have been filed. Accordingly, tax liabilities are recorded when, in management's judgment, a tax position does not meet the more likely than not threshold for recognition. For tax positions that meet the more likely than not threshold, a tax liability may be recorded depending on management's assessment of how the tax position will ultimately be settled.
McDonald's Corp. records interest and penalties on unrecognized tax benefits in the provision for income taxes.
Source: McDonald's Corp., Annual Report
Income Tax Expense (Benefit)
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McDonald's Corp., income tax expense (benefit), continuing operations
Source: Based on data from McDonald's Corp. Annual Reports
| Item |
Description |
The company |
| Current tax provision |
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. |
McDonald's Corp.'s current tax provision increased from 2009 to 2010 and from 2010 to 2011.
|
| Deferred tax provision (benefit) |
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. |
McDonald's Corp.'s deferred tax provision (benefit) declined from 2009 to 2010 but then increased from 2010 to 2011 not reaching 2009 level.
|
| 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. |
McDonald's 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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McDonald's Corp., effective income tax rate (EITR) reconciliation
Source: Based on data from McDonald's Corp. Annual Reports
| Item |
Description |
The company |
| Effective income tax rates |
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. |
McDonald's Corp.'s effective income tax rates declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
Deferred Tax Assets (Liabilities), Net
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McDonald's Corp., deferred tax assets (liabilities), net
Source: Based on data from McDonald's Corp. Annual Reports
| Item |
Description |
The company |
| Deferred tax assets before valuation allowance |
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. |
McDonald's Corp.'s deferred tax assets before valuation allowance increased from 2009 to 2010 but then slightly declined from 2010 to 2011.
|
| 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. |
McDonald's Corp.'s deferred tax assets increased from 2009 to 2010 but then slightly declined from 2010 to 2011.
|
| 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. |
McDonald's Corp.'s net deferred tax assets (liabilities) increased from 2009 to 2010 but then declined significantly from 2010 to 2011.
|
