Delta Airlines 2010 Annual Report Download - page 85

Table of Contents
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 based on 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, 2010, we had (1) $424 million of federal alternative minimum tax ("AMT") credit carryforwards, which do not expire and (2)
$17.5 billion of federal and state pretax NOL carryforwards, substantially all of which will not begin to expire until 2022.
Both Delta and Northwest experienced an ownership change in 2007 as a result of their plans of reorganization under Chapter 11 of the U.S. Bankruptcy
Code. As a result of the Merger, Northwest experienced a subsequent ownership change. Delta also experienced a subsequent ownership change on
December 17, 2008 due to the Merger, the issuance of equity to employees in connection with the Merger and other transactions involving the sale of
common stock within the testing period. We currently expect these ownership changes will not significantly limit our ability to utilize our AMT credit or
NOLs in the carryforward period.
Uncertain Tax Positions
The following table shows the amount of unrecognized tax benefits on our Consolidated Balance Sheets and summarizes the changes to the amount of
unrecognized tax benefits:
(in millions)
Unrecognized tax benefits at January 1, 2008 $ 143
Gross increases-tax positions in prior period 2
Gross decreases-tax positions in prior period (91)
Settlements (25)
Unrecognized tax benefits at December 31, 2008(1) 29
Gross increases-tax positions in prior period 1
Gross decreases-tax positions in prior period (1)
Gross increases-tax positions in current period 40
Settlements (3)
Unrecognized tax benefits at December 31, 2009(1) 66
Gross decreases-tax positions in prior period (3)
Gross increases-tax positions in current period 29
Lapse of statute of limitations (2)
Settlements (1)
Unrecognized tax benefits at December 31, 2010(1) $ 89
(1) Unrecognized tax benefits on our Consolidated Balance Sheets as of December 31, 2010, 2009 and 2008, include tax benefits of $72 million,
$47 million, and $10 million, respectively, which will affect the effective tax rate when recognized.
We accrue interest and penalties related to unrecognized tax benefits in interest expense and operating expense, respectively. The impact related to interest
and penalties on our Consolidated Statements of Operations for the years ended December 31, 2010, 2009 and 2008 was not material.
We are currently under audit by the IRS for the 2008, 2009 and 2010 tax years.
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