Income Taxes

6 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

Income Taxes

NOTE 8. Income Taxes

GATX’s effective tax rate was 35% for the six months ended June 30, 2012, compared to 25% for the six months ended June 30, 2011. GATX’s effective tax rate in any period is driven by the mix of pre-tax income, including share of affiliates’ earnings, among domestic and foreign jurisdictions, which are taxed at different rates. The effective tax rate in the current period reflects the impact of an $18.8 million loss related to certain interest rate swaps at AAE, which were taxed at the low Swiss statutory rate of approximately 10%, as well as a $0.7 million deferred tax adjustment recognized in connection with an increase in the statutory tax rates of Ontario, Canada. The effective tax rate in 2011 includes the impact of a $14.1 million gain related to interest rate swaps at AAE taxed at the Swiss rate. Excluding these items from each period, the effective tax rate for each of the first six months of 2012 and 2011 was 29%.

As of June 30, 2012, GATX’s gross liability for unrecognized tax benefits totaled $20.8 million, which, if fully recognized, would decrease income tax expense by $20.8 million ($18.8 million net of federal tax impact). Subject to the completion of certain audits or the expiration of the applicable statute of limitations, the Company believes it is reasonably possible that, within the next 12 months, unrecognized domestic tax benefits of $15.5 million and unrecognized foreign tax benefits of $0.4 million may be recognized.