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Posted on Oct 01, 2024

1. What is the total amount of income tax expense that DuPont reports in its 2015 income statement? What portion of this expense did DuPont

1. What is the total amount of income tax expense that DuPont reports in its 2015 income statement? What portion of this expense did DuPont pay during 2015 or expect to pay in 2016?

2. Explain how the deferred tax liability called depreciation arises. Under what circumstances will the company settle this liability? Under what circumstances might this liability be deferred indefinitely?

3. Explain how the deferred tax asset called accrued employee benefits arises. Why is it recognized as an asset?

4. Explain how the deferred tax asset called tax loss/tax credit carryforwards/backs arises. Under what circumstances will DuPont realize the benefits of this asset?

5. DuPont reports a 2015 valuation allowance of $1,529 million. How does this valuation allowance arise? How did the change in valuation allowance for 2015 affect net income? Valuation allowances typically relate to questions about the realizability of tax loss carryforwards. Under what circumstances might DuPont not realize the benefits of its tax loss carryforwards?

6. DuPonts footnote reports the effective income tax rates (EITR) for the three-year period. What explains the difference between the U.S. statutory rate and the companys EITR?

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Consider the following income tax footnote information for the E. I. du Pont de Nemours and Company. An analysis of the company's effective income tax rate (EITR) on continuing operations is as follows: 2015 2014 Provision for Income Taxes ($ millions) Current tax expense on continuing operations U.S. federal U.S. state and local ... International Total current tax expense on continuing operations ..... Deferred tax expense (benefit) on continuing operations U.S. federal......... U.S. state and local ... International ........................................ Total deferred tax expense on continuing operations ........ Provision for income taxes on continuing operations .... $ 656 38 449 1,143 Statutory U.S. federal income tax rate..... Exchange gains/losses. Domestic operations ............... Lower effective tax rates on international operations-net... Tax settlements ...... Sale of a business.................................. U.S. research & development credit. .................... 2015 35.0% 8.0 (2.8) (11.1) (0.7) (0.2) (1.3) 26.9% 2014 35.0% 8.1 (2.8) (11.4) (0.6) (0.4) (0.8) 27.1% 2013 35.0% 1.0 (4.1) (14.7) (0.3) (2.9) 14.0% 25 $1,168 The significant components of deferred tax assets and liabilities at December 31, 2015 and 2014, are as follows: $ millions 2015 Asset Liability $ - $ 953 4,812 374 563 125 - 224 2,124 133 154 1,331 2014 Asset Liability $ - $1,003 5,376 746 555 151 137 Depreciation.... Accrued employee benefits ... Other accrued expenses ............. Inventories ................. Unrealized exchange gains/losses..... Tax loss/tax credit carryforwards/backs Investment in subsidiaries and affiliates. Amortization of intangibles..... Other........ Valuation allowance 173 2,409 151 195 1,353 154 187 215 110 (1,529) $6,630 $3,418 $3,212 258 (1,704) $7,350 $3,633 $3,717 Net deferred tax asset Consider the following income tax footnote information for the E. I. du Pont de Nemours and Company. An analysis of the company's effective income tax rate (EITR) on continuing operations is as follows: 2015 2014 Provision for Income Taxes ($ millions) Current tax expense on continuing operations U.S. federal U.S. state and local ... International Total current tax expense on continuing operations ..... Deferred tax expense (benefit) on continuing operations U.S. federal......... U.S. state and local ... International ........................................ Total deferred tax expense on continuing operations ........ Provision for income taxes on continuing operations .... $ 656 38 449 1,143 Statutory U.S. federal income tax rate..... Exchange gains/losses. Domestic operations ............... Lower effective tax rates on international operations-net... Tax settlements ...... Sale of a business.................................. U.S. research & development credit. .................... 2015 35.0% 8.0 (2.8) (11.1) (0.7) (0.2) (1.3) 26.9% 2014 35.0% 8.1 (2.8) (11.4) (0.6) (0.4) (0.8) 27.1% 2013 35.0% 1.0 (4.1) (14.7) (0.3) (2.9) 14.0% 25 $1,168 The significant components of deferred tax assets and liabilities at December 31, 2015 and 2014, are as follows: $ millions 2015 Asset Liability $ - $ 953 4,812 374 563 125 - 224 2,124 133 154 1,331 2014 Asset Liability $ - $1,003 5,376 746 555 151 137 Depreciation.... Accrued employee benefits ... Other accrued expenses ............. Inventories ................. Unrealized exchange gains/losses..... Tax loss/tax credit carryforwards/backs Investment in subsidiaries and affiliates. Amortization of intangibles..... Other........ Valuation allowance 173 2,409 151 195 1,353 154 187 215 110 (1,529) $6,630 $3,418 $3,212 258 (1,704) $7,350 $3,633 $3,717 Net deferred tax asset