Sum pfizers effective tax rate for 2010 is 119 which

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- sum, Pfizer's effective tax rate for 2010 is 11.9%, which is 23.1 percentage points below .:..::-~tatutory rate. In 2009, however, the effective tax rate was 20.3% and in 2008 it was 17%. 'ODS, such as these, in the effective tax rate are not uncommon and highlight the differ- oerween income reported under GAAP and that computed using multiple tax codes and tax "yes under which companies operate. Appendix SA explains accounting for deferred taxes detail. Reconciliation of the U.S. statutory income tax rate to our effective tax rate for income from continuing operations follows: Year Ended Dec. 31 2010 2009 2008 U.S. statutory income tax rate .......................... 35.0% 35.0% 35.0% ~rnings taxed at other than U.S. statutory rate ............ 2.5 (9.3) (20.2) Resolution of certain tax positions ....................... (26.4) (3.1) Sales of biopharmaceutical companies ................... (5.1) (4.3) U.S. healthcare legislation ............................. 2.8 U.S. researchtax credit and manufacturing deduction ....... (2.3) (1.3) (1.2) legal settlements .................................... 0.4 (1.6) 9.0 Acquired IPR&D ...................................... 0.5 0.2 2.1 :llyeth acquisition-related costs ......................... 0.5 2.4 other-net ....................................... (1.1) (0.3) afective tax rate for income from continuing operations ..... 11.9% 20.3% 17.0% sis of Income Tax Disclosures _ is of deferred taxes can yield useful insights. Some revenue accruals (such as accounts - "ablefor longer-term contracts) increase deferred tax liabilities as GAAP income exceeds me (similar to the effect of using straight-line depreciation for financial reporting pur- and accelerated depreciation for tax returns). An increase in deferred tax liabilities indicates that a company is reporting higher GAAP e relative to taxable income and can indicate the company is managing earnings upwards. difference between reported corporate profits and taxable income increased substantially in e 1990s, just prior to huge asset write-offs. CFO Magazine (November 2002) implied that differences are important for analysis and should be monitored: - eling the sense that something [was] amiss [was] the growing gap between the two sets of mbers. In 1992, there was no significant difference between pretax book income and taxable t income ... By 1996, according to IRS data, a $92.5 billion gap had appeared. By 1998 [prior the market decline], the gap was $159 billion-a fourth of the total taxable income reported ... " people had seen numbers showing very significant differences between book numbers for trad- :ng and tax numbers, they would have wondered if those [income] numbers were completely real. ugh an increase in deferred tax liabilities can legitimately result, for example, from an e in depreciable assets and the use of accelerated depreciation for tax purposes, we must ware of the possibility that such an increase arises from improper revenue recognition in that company might not be reporting those revenues to tax authorities.
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5-25 Module 5 I Revenue Recognition and Operating Income I Pfizer ($ millions) 2010 2009 Adequacy of Deferred Tax Asset Valuation Analysis of the deferred tax asset valuation account provides us with additional insight. This analy- sis involves (1) assessing the adequacy of the valuation allowance and (2) determining how and why the valuation account changed during the period and how that change affects net income.
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