Delta Airlines 2015 Annual Report Download - page 94

TableofContents
AtDecember31,2015,wehad$379millionoffederalalternativeminimumtaxcreditcarryforwards,whichdonotexpire,and$9.5billionoffederalpre-tax
netoperatinglosscarryforwards,whichwillnotbegintoexpireuntil2024.
Valuation Allowance
Weperiodicallyassesswhetheritismorelikelythannotthatwewillgeneratesufficienttaxableincometorealizeourdeferredincometaxassets.Weestablish
valuationallowancesifitisnotlikelywewillrealizeourdeferredincometaxassets.Inmakingthisdetermination,weconsiderallavailablepositiveandnegative
evidenceandmakecertainassumptions.Weconsider,amongotherthings,projectedfuturetaxableincome,scheduledreversalsofdeferredtaxliabilities,the
overallbusinessenvironment,ourhistoricalfinancialresultsandtaxplanningstrategies.Werecordedafullvaluationallowancein2004duetoourcumulativeloss
positionatthattime,compoundedbythenegativeindustry-widebusinesstrendsandoutlook.
AtDecember31,2013,wereleasedsubstantiallyallofthevaluationallowanceagainstournetdeferredtaxassets,resultinginan$8.3billionbenefitinour
provisionforincometaxes.During2014and2015,wecontinuedourtrendofsustainedprofitability.Afterconsideringallavailablepositiveandnegativeevidence,
wereleasedadditionalvaluationallowancesrelatedtonetoperatinglossesandcapitallosscarryoversineachofthoseyears.Asaresult,atDecember31,2014and
2015,weretainedvaluationallowancesof$46millionand$56million,respectively,primarilyrelatedtostatenetoperatinglosses,statecreditsandunrealized
lossesoninvestments,whichhavelimitedexpirationperiods.
Thefollowingtableshowsthebalanceofourvaluationallowanceandtheassociatedactivity:
(inmillions) 2015 2014 2013
Valuationallowanceatbeginningofperiod $ 46 $ 177 $ 10,963
Incometaxprovision — (9) (975)
Othercomprehensiveincometaxbenefit(provision) 24 (3) (1,186)
Expirations (4) (91) —
Releaseofvaluationallowance (10) (28) (8,310)
Other — — (315)
Valuationallowanceatendofperiod $ 56 $ 46 $ 177
Income Tax Allocation
Weconsiderallincomesources,includingothercomprehensiveincome,indeterminingtheamountoftaxbenefitallocatedtocontinuingoperations.Attheend
of2013,wereleasedourtaxvaluationallowance,asdiscussedabove,andsettledallofourfuelderivativesdesignatedasaccountinghedges.Asaresult,anincome
taxbenefitof$1.9billionrelatedtoourvaluationallowancereleaseandanincometaxexpenseof$321millionrelatedtosettlementofourfuelderivativewas
recognizedinourConsolidatedStatementofOperationsfortheyearendedDecember31,2013.Incometaxexpenseof$1.9billionremainsinAOCI,primarily
relatedtopensionobligations.Thistaxexpensewillnotberecognizedinnetincomeuntilthepensionobligationsarefullyextinguished.
Uncertain Tax Positions
Theamountof,andchangesto,ouruncertaintaxpositionswerenotmaterialinanyoftheyearspresented.Theamountofunrecognizedtaxbenefitsat
December31,2015,2014and2013was$32million,$40millionand$37million,respectively.Weaccrueinterestandpenaltiesrelatedtounrecognizedtax
benefitsininterestexpenseandoperatingexpense,respectively.Interestandpenaltiesarenotmaterialinanyperiodpresented.
WearecurrentlyunderauditbytheIRSforthe2015,2014and2013taxyears.
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