Delta Airlines 2005 Annual Report Download - page 103

Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 11. Income Taxes
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and income tax purposes (see Note 2 for information about our accounting policy for income taxes). The
following table shows significant components of our deferred tax assets and liabilities at December 31, 2005 and 2004:
(in millions) 2005 2004
Deferred tax assets:
Net operating loss carryforwards $ 3,246 $ 2,848
Additional minimum pension liability (see Note 12) 1,565 1,427
Postretirement benefits 716 734
Other employee benefits 992 568
AMT credit carryforward 346 346
Rent expense 398 255
Other 757 703
Valuation allowance (3,954) (2,400)
Total deferred tax assets $ 4,066 $ 4,481
Deferred tax liabilities:
Depreciation and amortization $ 3,763 $ 3,890
Other 336 672
Total deferred tax liabilities $ 4,099 $ 4,562
The following table shows the current and noncurrent deferred tax (liability) asset, recorded on our Consolidated Balance Sheets at
December 31, 2005 and 2004:
(in millions) 2005 2004
Current deferred tax assets, net $ 99 $ 35
Noncurrent deferred tax liabilities, net (132) (116)
Total deferred tax liabilities, net $ (33) $ (81)
In accordance with SFAS No. 109, "Accounting for Income Taxes" ("SFAS 109"), the current and noncurrent components of our
deferred tax balances are generally based on the balance sheet classification of the asset or liability creating the temporary difference.
If the deferred tax asset or liability is not related to a component of our balance sheet, such as our net operating loss ("NOL")
carryforwards, the classification is presented based on the expected reversal date of the temporary difference. Our valuation allowance
has been classified as current or noncurrent based on the percentages of current and noncurrent deferred tax assets to total deferred tax
assets.
At December 31, 2005, we had $346 million of federal alternative minimum tax ("AMT") credit carryforwards, which do not
expire. We also had federal and state pretax NOL carryforwards of approximately $8.5 billion at December 31, 2005, substantially all
of which will not begin to expire until 2022. Our ability to utilize our AMT and NOL carryforwards will be subject to significant
limitation if, as a result of our Chapter 11 filing, we undergo an ownership change for purposes of Section 382 of the Internal Revenue
Code of 1986, as amended. This could result in the need for an additional valuation allowance, which may be material. For additional
information about the Bankruptcy Court's order designed to assist us in preserving our NOLs, see Note 1.
F-41