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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2012
Components of Income from Continuing Operations Before Income Taxes | The components of income from continuing operations before income taxes were as follows:
|  | 2012 |  |  | 2011 |  |  | 2010 |
U.S. |  | $ | 394 |  |  | $ | (98 | ) |  | $ | (403 | )
Foreign |  |  | (70 | ) |  |  | 1,161 |  |  |  | 951 |
|  | $ | 324 |  |  | $ | 1,063 |  |  | $ | 548 |
Schedule of Provision for Income Taxes on Income from Continuing Operations | The provision for income taxes on income from continuing operations consisted of the following:
|  | 2012 |  |  | 2011 |  |  | 2010 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal* |  | $ | 85 |  |  | $ | 10 |  |  | $ | 33 |
Foreign |  |  | 167 |  |  |  | 427 |  |  |  | 409 |
State and local |  |  | 9 |  |  |  | (1 | ) |  |  | (7 | )
|  |  | 261 |  |  |  | 436 |  |  |  | 435 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal* |  |  | 129 |  |  |  | 28 |  |  |  | 37 |
Foreign |  |  | (227 | ) |  |  | (211 | ) |  |  | (320 | )
State and local |  |  | (1 | ) |  |  | 2 |  |  |  | (4 | )
|  |  | (99 | ) |  |  | (181 | ) |  |  | (287 | )
Total |  | $ | 162 |  |  | $ | 255 |  |  | $ | 148 |
* | Includes U.S. taxes related to foreign income
Reconciliation of U.S. Federal Statutory Rate to Alcoa's Effective Tax Rate for Continuing Operations | A reconciliation of the U.S. federal statutory rate to Alcoa’s effective tax rate for continuing operations was as follows:
|  | 2012 |  |  | 2011 |  |  | 2010 |
U.S. federal statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Taxes on foreign operations |  |  | (0.1 | ) |  |  | (11.0 | ) |  |  | (5.4 | )
Permanent differences on restructuring charges and asset disposals |  |  | 10.8 |  |  |  | - |  |  |  | 0.7 |
Audit and other adjustments to prior years’ accruals |  |  | 3.5 |  |  |  | (1.1 | ) |  |  | 1.2 |
Noncontrolling interests |  |  | 3.8 |  |  |  | 0.8 |  |  |  | 2.6 |
Statutory tax rate and law changes |  |  | (0.4 | ) |  |  | 0.8 |  |  |  | (5.1 | )
Tax law change related to Medicare Part D |  |  | - |  |  |  | - |  |  |  | 14.4 |
Changes in valuation allowances |  |  | 15.2 |  |  |  | 2.3 |  |  |  | (8.7 | )
Amortization of goodwill related to intercompany stock sales/reorganizations |  |  | (7.7 | ) |  |  | (2.8 | ) |  |  | (5.2 | )
Change in legal structure of investment |  |  | (4.1 | ) |  |  | - |  |  |  | - |
Interest income related to income tax positions |  |  | (1.3 | ) |  |  | (0.2 | ) |  |  | - |
Company-owned life insurance/split-dollar net premiums |  |  | (3.9 | ) |  |  | (0.2 | ) |  |  | (1.8 | )
Other |  |  | (0.8 | ) |  |  | 0.4 |  |  |  | (0.8 | )
Effective tax rate |  |  | 50.0 | % |  |  | 24.0 | % |  |  | 26.9 | %
Schedule of Components of Net Deferred Tax Assets and Liabilities | The components of net deferred tax assets and liabilities were as follows:
|  | 2012 |  |  | 2011 |
December 31, |  | Deferred tax assets |  |  | Deferred tax liabilities |  |  | Deferred tax assets |  |  | Deferred tax liabilities |
Depreciation |  | $ | 104 |  |  | $ | 1,015 |  |  | $ | 74 |  |  | $ | 933 |
Employee benefits |  |  | 2,742 |  |  |  | 46 |  |  |  | 2,668 |  |  |  | 51 |
Loss provisions |  |  | 368 |  |  |  | 17 |  |  |  | 325 |  |  |  | 9 |
Deferred income/expense |  |  | 53 |  |  |  | 203 |  |  |  | 45 |  |  |  | 181 |
Tax loss carryforwards |  |  | 2,186 |  |  |  | - |  |  |  | 2,035 |  |  |  | - |
Tax credit carryforwards |  |  | 508 |  |  |  | - |  |  |  | 477 |  |  |  | - |
Derivatives and hedging activities |  |  | 117 |  |  |  | 16 |  |  |  | 109 |  |  |  | 43 |
Other |  |  | 324 |  |  |  | 297 |  |  |  | 315 |  |  |  | 288 |
|  |  | 6,402 |  |  |  | 1,594 |  |  |  | 6,048 |  |  |  | 1,505 |
Valuation allowance |  |  | (1,400 | ) |  |  | - |  |  |  | (1,398 | ) |  |  | - |
|  | $ | 5,002 |  |  | $ | 1,594 |  |  | $ | 4,650 |  |  | $ | 1,505 |
Schedule of Expiration Periods of Deferred Tax Assets | The following table details the expiration periods of the deferred tax assets presented above:
December 31, 2012 |  | Expires within 10 years |  |  | Expires within 11-20 years |  |  | No expiration* |  |  | Other* |  |  | Total |
Tax loss carryforwards |  | $ | 332 |  |  | $ | 886 |  |  | $ | 968 |  |  | $ | - |  |  | $ | 2,186 |
Tax credit carryforwards |  |  | 370 |  |  |  | 73 |  |  |  | 65 |  |  |  | - |  |  |  | 508 |
Other |  |  | - |  |  |  | - |  |  |  | 762 |  |  |  | 2,946 |  |  |  | 3,708 |
Valuation allowance |  |  | (212 | ) |  |  | (659 | ) |  |  | (244 | ) |  |  | (285 | ) |  |  | (1,400 | )
|  | $ | 490 |  |  | $ | 300 |  |  | $ | 1,551 |  |  | $ | 2,661 |  |  | $ | 5,002 |
* | Deferred tax assets with no expiration may still have annual limitations on utilization. Other represents deferred tax assets whose expiration is dependent upon the reversal of the underlying temporary difference. A substantial amount of Other relates to employee benefits that will become deductible for tax purposes over an extended period of time as contributions are made to employee benefit plans and payments are made to retirees.
Schedule of Changes in Valuation Allowance | The following table details the changes in the valuation allowance:
December 31, |  | 2012 |  |  | 2011 |
Balance at beginning of year |  | $ | 1,398 |  |  | $ | 1,268 |
Increase to allowance |  |  | 45 |  |  |  | 157 |
Release of allowance |  |  | (48 | ) |  |  | (25 | )
Foreign currency translation |  |  | 5 |  |  |  | (2 | )
Balance at end of year |  | $ | 1,400 |  |  | $ | 1,398 |
Reconciliation of Unrecognized Tax Benefits (Excluding Interest and Penalties) | A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) was as follows:
December 31, |  | 2012 |  |  | 2011 |  |  | 2010 |
Balance at beginning of year |  | $ | 51 |  |  | $ | 46 |  |  | $ | 48 |
Additions for tax positions of the current year |  |  | - |  |  |  | - |  |  |  | - |
Additions for tax positions of prior years |  |  | 39 |  |  |  | 13 |  |  |  | 30 |
Reductions for tax positions of prior years |  |  | (7 | ) |  |  | (3 | ) |  |  | (5 | )
Settlements with tax authorities |  |  | (18 | ) |  |  | (4 | ) |  |  | (22 | )
Expiration of the statute of limitations |  |  | - |  |  |  | - |  |  |  | (5 | )
Foreign currency translation |  |  | 1 |  |  |  | (1 | ) |  |  | - |
Balance at end of year |  | $ | 66 |  |  | $ | 51 |  |  | $ | 46 |

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