Income Tax Accounting Policy
Income taxes are accounted for on an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in UPS's consolidated financial statements or tax returns. In estimating future tax consequences, UPS generally considers all expected future events other than proposed changes in the tax law or rates. Valuation allowances are provided if it is more likely than not that a deferred tax asset will not be realized.
UPS recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. Once it is determined that the position meets the recognition threshold, the second step requires UPS to estimate and measure the tax benefit as the largest amount that is more likely than not to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as UPS has to determine the probability of various possible outcomes. UPS reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an additional charge to the tax provision.
Source: United Parcel Service Inc., Annual Report
Income Tax Expense (Benefit)
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United Parcel Service Inc., income tax expense (benefit), continuing operations
Source: Based on data from United Parcel Service Inc. 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. |
United Parcel Service Inc.'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. |
United Parcel Service Inc.'s deferred increased from 2009 to 2010 but then declined significantly from 2010 to 2011.
|
| Income tax expense (benefit) |
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. |
United Parcel Service Inc.'s income tax expense (benefit) increased from 2009 to 2010 but then slightly declined from 2010 to 2011.
|
Effective Income Tax Rate (EITR)
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United Parcel Service Inc., effective income tax rate (EITR) reconciliation
Source: Based on data from United Parcel Service Inc. 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. |
United Parcel Service Inc.'s effective income tax rate increased from 2009 to 2010 but then declined significantly from 2010 to 2011.
|
Deferred Tax Assets (Liabilities), Net
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United Parcel Service Inc., deferred tax assets (liabilities), net
Source: Based on data from United Parcel Service Inc. 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. |
United Parcel Service Inc.'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. |
United Parcel Service Inc.'s net deferred tax assets declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
| Net deferred tax asset (liability) |
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. |
United Parcel Service Inc.'s net deferred tax asset (liability) declined from 2009 to 2010 and from 2010 to 2011.
|
