|12 Months Ended|
Dec. 31, 2012
|Income Tax Disclosure [Abstract]|
17. Income Taxes
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state, city, and foreign jurisdictions. Federal income tax audits have been completed through 2009. The Company has appealed certain proposed adjustments resulting from the IRS examination of the 2006 and 2007 tax returns. In addition, we will appeal certain proposed adjustments resulting from the IRS examination of our 2008 and 2009 tax returns. Management believes the tax positions taken related to such proposed adjustments were correct and supported by applicable statutes, regulations, and judicial authority, and intend to vigorously defend them. During 2011, Management entered into discussions with the Appeals Division of the IRS for the 2006 and 2007 tax returns. It is possible the ultimate resolution of the proposed adjustments, if unfavorable, may be material to the results of operations in the period it occurs. However, although no assurance can be given, Management believes the resolution of these examinations will not, individually or in the aggregate, have a material adverse impact on our consolidated financial position. In the 2013 first quarter, the IRS will begin its examination of our 2010 and 2011 federal income tax returns. Various state and other jurisdictions remain open to examination for tax years 2006 and forward.
Huntington accounts for uncertainties in income taxes in accordance with ASC 740, Income Taxes. At December 31, 2012, Huntington had gross unrecognized tax benefits of $6.2 million in income tax liability related to tax positions. Due to the complexities of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities. However, any ultimate settlement is not expected to be material to the Consolidated Financial Statements as a whole. Huntington does not anticipate the total amount of gross unrecognized tax benefits to significantly change within the next 12 months.
The following table provides a reconciliation of the beginning and ending amounts of gross unrecognized tax benefits:
Any interest and penalties on income tax assessments or income tax refunds are recognized in the Consolidated Statements of Income as a component of provision for income taxes. Huntington recognized $0.1 million of interest benefit for the year ended December 31, 2012, and $0.1 million, and $2.2 million of interest expense for the years ended December 31, 2011 and 2010, respectively. Total interest accrued was $2.2 million and $2.3 million for the years ended December 31, 2012 and 2011, respectively. All of the gross unrecognized tax benefits would impact the Company's effective tax rate if recognized.
The following is a summary of the provision (benefit) for income taxes:
Tax impact associated with securities transactions included in the above amounts were $1.7 million of tax expense in 2012, and tax benefits of $1.3 million in 2011, and $0.1 million in 2010.
The following is a reconcilement of provision for income taxes:
At December 31, 2012, Huntington's net deferred tax asset related to loss and other carryforwards was $215.2 million. This was comprised of federal net operating loss carryforwards of $27.0 million, which will begin expiring in 2023, $86.6 million of state net operating loss carryforward, which will begin expiring in 2015, an alternative minimum tax credit carryforward of $50.1 million, which may be carried forward indefinitely, a general business credit carryover of $47.7 million, which will begin expiring in 2027, a capital loss carryforward of $3.0 million, which will expire in 2015, and a charitable contribution carryforward of $0.8 million, which will expire in 2016. A valuation allowance of $3.0 million has been established for the capital loss carryforward because Management believes that it is more likely than not that the realization of this asset will not occur. The valuation allowance on this capital loss carryforward decreased $20.5 million compared with 2011 from the utilization and expiration of capital loss carryforwards.
In prior periods, Huntington established a full valuation allowance against state deferred tax assets and state net operating loss carryforwards based on the uncertainty of forecasted state taxable income expected in applicable jurisdictions in order to utilize the state deferred tax asset and net operating loss carryforwards. Based on current analysis of both positive and negative evidence and projected forecasted state taxable income, the Company believes that it is more likely than not that a portion of the state deferred tax asset and state net operating loss carryforwards will be realized. As a result of this analysis, a valuation allowance of $32.7 was adjusted for the portion of the deferred tax asset and state net operating loss carryforwards the Company expects to realize.
A valuation allowance of $64.8 million remains for certain state deferred tax assets, state net operating loss carryforwards, and capital loss carryfowards that are not expected to be realized within the carryforward periods. In Management's opinion, the results of future operations will generate sufficient taxable income to realize the net operating loss, alternative minimum tax credit carryforward, charitable contribution carryforward, and general business credit carryforward. Consequently, Huntington determined that a valuation allowance for these deferred tax assets was not required as of December 31, 2012.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/presentationRef