Income taxes Income taxes (Tables)

12 Months Ended

Dec. 31, 2012

The provision for income taxes includes the following for the years ended December 31, 2012, 2011 and 2010 (in millions):



	2012			2011			2010
Current provision:
Federal	$	438		$	551		$	620
State	47			54			52
Foreign	158			148			153
Total current provision	643			753			825
Deferred provision (benefit):
Federal	83			(273		)	(180		)
State	(43		)	(12		)	43
Foreign	(19		)	(1		)	2
Total deferred provision (benefit)	21			(286		)	(135		)
Total provision	$	664		$	467		$	690

Significant components of deferred tax assets and liabilities

Significant components of our deferred tax assets and liabilities are as follows as of December 31, 2012 and 2011 (in millions):



	2012			2011
Deferred income tax assets ⁽¹⁾:
Expense accruals	$	805		$	751
NOL and credit carryforwards	427			206
Expenses capitalized for tax	195			193
Stock-based compensation	115			241
Deferred revenue	40			133
Other	83			70
Total deferred income tax assets	1,665			1,594
Valuation allowance	(273		)	(126		)
Net deferred income tax assets	1,392			1,468

Deferred income tax liabilities:
Acquired intangibles	(1,249		)	(832		)
Fixed assets	(117		)	(219		)
Unremitted foreign earnings	(106		)	(61		)
Other	(145		)	(110		)
Total deferred income tax liabilities	(1,617		)	(1,222		)
Total deferred income taxes, net	$	(225	)	$	246

⁽¹⁾

In 2012, we reclassified certain prior period amounts to conform with current period reporting, primarily in connection with reclassifying prepaid taxes associated with intercompany profit in ending inventory from current deferred tax assets to prepaid taxes. Prepaid taxes are not included in the net deferred income tax table above; therefore, amounts related to these prepaid taxes which totaled $349 million for 2011 have been removed from the above table.

Reconciliation of total gross amounts of unrecognized tax benefits (excluding interest, penalties, foreign tax credits and the federal tax benefit of state taxes related to unrecognized tax benefits)

The reconciliation of the total gross amounts of UTBs (excluding interest, penalties, foreign tax credits and the federal tax benefit of state taxes related to UTBs) for the years ended December 31, 2012, 2011 and 2010 is as follows (in millions):



	2012			2011			2010
Balance at beginning of year	$	975		$	920		$	1,140
Additions based on tax positions related to the current year	300			283			305
Reductions for tax positions of prior years	(45		)	(7		)	(110		)
Settlements	(30		)	(221		)	(415		)
Balance at end of year	$	1,200		$	975		$	920

Reconciliation between the federal statutory tax rate and effective tax rate

The reconciliation between the federal statutory tax rate applied to income before income taxes and our effective tax rate for the years ended December 31, 2012, 2011 and 2010, is as follows:



	2012		2011		2010
Federal statutory tax rate	35.0	%	35.0	%	35.0	%
Foreign earnings, including earnings invested indefinitely	(17.8	)%	(19.4	)%	(19.1	)%
State taxes	0.6	%	0.7	%	1.6	%
Credits, Puerto Rico Excise Tax	(5.2	)%	(6.5	)%	0.0	%
Credits, primarily federal R&D	0.0	%	(1.5	)%	(0.9	)%
Legal settlements	(0.2	)%	2.2	%	0.0	%
Audit settlements (federal, state, foreign)	0.3	%	0.0	%	(3.1	)%
Other, net	0.6	%	0.8	%	(0.5	)%
Effective tax rate	13.3	%	11.3	%	13.0	%