Kraft Foods Inc. (KFT) | Analysis of Income Taxes

Income Tax Accounting Policy

Kraft Foods Inc. recognizes tax benefits in financial statements when uncertain tax positions are more likely than not to be sustained upon audit. The amount Kraft Foods Inc. recognizes is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.

Kraft Foods Inc. recognizes deferred tax assets for deductible temporary differences, operating loss carryforwards and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

Source: Kraft Foods Inc., Annual Report

Income Tax Expense (Benefit)

Kraft Foods Inc., income tax expense (benefit), continuing operations

Source: Based on data from Kraft Foods 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.	Kraft Foods Inc.'s current declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
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.	Kraft Foods Inc.'s deferred increased from 2009 to 2010 but then declined significantly 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.	Kraft Foods Inc.'s provision for income taxes declined from 2009 to 2010 but then increased from 2010 to 2011 not reaching 2009 level.

Effective Income Tax Rate (EITR)

Kraft Foods Inc., effective income tax rate (EITR) reconciliation

Source: Based on data from Kraft Foods Inc. Annual Reports

Item	Description	The company
Effective 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.	Kraft Foods Inc.'s effective tax rate increased from 2009 to 2010 but then declined significantly from 2010 to 2011.

Deferred Tax Assets (Liabilities), Net

Kraft Foods Inc., deferred tax assets (liabilities), net

Source: Based on data from Kraft Foods Inc. Annual Reports

Item	Description	The company
Deferred income 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.	Kraft Foods Inc.'s deferred income tax assets declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
Net deferred income 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.	Kraft Foods Inc.'s net deferred income tax assets declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
Net deferred income 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.	Kraft Foods Inc.'s net deferred income tax assets (liabilities) declined from 2009 to 2010 but then slightly increased from 2010 to 2011.