Tax Credit Carryforwards

FORD MOTOR COMPANY AND SUBSIDIARIESNOTES TO THE FINANCIAL STATEMENTSNOTE 7. INCOME TAXES (Continued)  
Components of Deferred Tax Assets and Liabilities  
The components of deferred tax assets and liabilities at December 31 were as follows (in millions):

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|   | 2020 |  | 2021 |
| Deferred tax assets |   |  |   |
| Employee benefit plans | $ | 4,760  |  |  | $ | 2,320  |  |
| Net operating loss carryforwards | 1,584  |  |  | 4,163  |  |
| Tax credit carryforwards | 11,037  |  |  | 10,437  |  |
| Research expenditures | 1,321  |  |  | 1,117  |  |
| Dealer and dealers’ customer allowances and claims | 2,145  |  |  | 1,944  |  |
| Other foreign deferred tax assets | 729  |  |  | 2,005  |  |
| All other | 2,335  |  |  | 2,353  |  |
| Total gross deferred tax assets | 23,911  |  |  | 24,339  |  |
| Less: Valuation allowances | (1,981) |  |  | (1,067) |  |
| Total net deferred tax assets | 21,930  |  |  | 23,272  |  |
| Deferred tax liabilities |   |  |   |
| Leasing transactions | 3,299  |  |  | 2,103  |  |
| Depreciation and amortization (excluding leasing transactions) | 3,218  |  |  | 2,881  |  |
| Finance receivables | 574  |  |  | 756  |  |
| Carrying value of investments | 144  |  |  | 2,149  |  |
| Other foreign deferred tax liabilities | 839  |  |  | 893  |  |
| All other | 1,971  |  |  | 2,275  |  |
| Total deferred tax liabilities | 10,045  |  |  | 11,057  |  |
| Net deferred tax assets/(liabilities) | $ | 11,885  |  |  | $ | 12,215  |  |

  
Deferred tax assets for net operating losses and other temporary differences related to certain non-U.S. operations have not been recorded as a result of elections to tax these operations simultaneously in U.S. tax returns. During 2021, we restructured a significant portion of these operations resulting in recognition of $2.9 billion of net deferred tax assets. Reversal of the remaining elections would result in the recognition of $4.3 billion of deferred tax assets, subject to valuation allowance testing.   
Operating loss carryforwards for tax purposes were $11.4 billion at December 31, 2021, resulting in a deferred tax asset of $4.2 billion.  There is no expiration date for $3.2 billion of these losses. A substantial portion of the remaining losses will expire beyond 2024. Tax credits available to offset future tax liabilities are $10.4 billion. The majority of these credits have a remaining carryforward period of five years or more. Tax benefits of operating loss and tax credit carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and available tax planning strategies. In our evaluation, we anticipate making tax elections that change the order of tax credit carryforward utilization on U.S. tax returns.127
