Alaska Airlines and Horizon Air 2014 Annual Report Download - page 166
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Income Tax Rate Reconciliation
Income tax expense reconciles to the amount computed by applying the U.S. federal rate of 35% to
income before income tax and accounting change as follows (in millions):
2014 2013 2012
Income before income tax $ 975 $ 816 $ 514
Expected tax expense 341 286 180
Nondeductible expenses 443
State income taxes 25 21 14
Other–net –(3) 1
Actual tax expense $ 370 $ 308 $ 198
Effective tax rate 37.9% 37.7% 38.5%
Uncertain Tax Positions
The Company has identified its federal tax return and its state tax returns in Alaska, Oregon, and
California as “major” tax jurisdictions. A summary of the Company’s jurisdictions and the periods that
are subject to examination are as follows:
Jurisdiction Period
Federal 2011 to 2013
Alaska 2011 to 2013
California 2010 to 2013
Oregon 2007 to 2013
The 2002 to 2007 Oregon tax returns are subject to examination only to the extent of net operating
loss carryforwards from those years that were utilized in 2010 and later years.
At December 31, 2014, the total amount of unrecognized tax benefits is recorded as a liability, all of
which impact the effective tax rate. Unrecognized tax benefits on uncertain tax positions were not
material as of December 31, 2014, 2013 and 2012. No interest or penalties related to these tax
positions were accrued as of December 31, 2014.
NOTE 8. EMPLOYEE BENEFIT PLANS
Four defined-benefit and five defined-contribution retirement plans cover various employee groups of
Alaska and Horizon. The defined-benefit plans provide benefits based on an employee’s term of service
and average compensation for a specified period of time before retirement. The qualified defined-benefit
pension plans are closed to new entrants.
Accounting standards require recognition of the overfunded or underfunded status of an entity’s
defined-benefit pension and other postretirement plan as an asset or liability in the consolidated
financial statements and requires recognition of the funded status in AOCL.
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