Alaska Airlines and Horizon Air 2014 Annual Report Download - page 165

Deferred tax (assets) and liabilities comprise the following (in millions):
2014 2013
Excess of tax over book depreciation $ 1,042 $ 919
Other–net 22 21
Gross deferred tax liabilities 1,064 940
Mileage Plan (206) (185)
Inventory obsolescence (20) (18)
Deferred gains (10) (12)
Employee benefits (166) (85)
Fuel hedge contracts (5) (14)
Other–net (24) (30)
Gross deferred tax assets (431) (344)
Net deferred tax liabilities 633 596
Current deferred tax asset (117) (113)
Noncurrent deferred tax liability 750 709
Net deferred tax liability $ 633 $ 596
The Company has concluded that it is more likely than not that its deferred tax assets will be realizable
and thus no valuation allowance has been recorded as of December 31, 2014. This conclusion is
based on the expected future reversals of existing taxable temporary differences, anticipated future
taxable income, and the potential for future tax planning strategies to generate taxable income, if
needed. The Company will continue to reassess the need for a valuation allowance during each future
reporting period.
Components of Income Tax Expense
The components of income tax expense were as follows (in millions):
2014 2013 2012
Current tax expense:
Federal $ 229 145 $ 83
State 27 17 11
Total current 256 162 94
Deferred tax expense:
Federal 103 131 94
State 11 15 10
Total deferred 114 146 104
Income tax expense $ 370 $ 308 $ 198
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ŠForm 10-K