Airtran 2010 Annual Report Download - page 102
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Income tax benefits recorded on losses result in deferred tax assets for financial reporting purposes. We are required to
provide a valuation allowance for deferred tax assets to the extent management determines that it is more likely than not
that such deferred tax assets will ultimately not be realized. We expect to realize our deferred tax assets (including the
deferred tax asset associated with loss carryforwards) through the reversal of existing temporary differences. As of
December 31, 2010, our deferred tax liabilities exceeded our deferred tax assets and the $1.0 million valuation allowance
related solely to capital loss carryforwards. Regardless of the financial accounting for income taxes, our net operating loss
carryforwards currently are available for use on our income tax returns to offset future taxable income.
The components of the provision (benefit) for income taxes are as follows (in thousands):
Year ended December 31,
2010 2009 2008
Current provision (benefit):
Federal $ • $(268) $ (198)
State • • •
Total current provision (benefit) • (268) (198)
Deferred provision (benefit):
Federal 20,041 890 (31,049)
State 1,260 55 (3,169)
Total deferred provision (benefit) 21,301 945 (34,218)
Income tax expense (benefit) $21,301 $ 677 $(34,416)
A reconciliation of taxes computed at the statutory federal tax rate on income before income taxes to the provision
(benefit) for income taxes follows (in thousands):
Year ended December 31,
2010 2009 2008
Tax expense (benefit) computed at federal statutory rate $20,945 $ 47,369 $(105,263)
State income taxes, net of federal benefit 1,463 3,113 (6,283)
Change in valuation allowance (3,995) (67,437) 73,793
Change in unrecognized tax benefits • 4,645 •
Other nondeductible expenses 2,888 12,987 3,337
Income tax expense (benefit) $21,301 $ 677 $ (34,416)
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