Frontier Communications 2008 Annual Report Download - page 83

The provision (benefit) for Federal and state income taxes, as well as the taxes charged or credited to
shareholders’ equity, includes amounts both payable currently and deferred for payment in future periods as
indicated below:
($ in thousands) 2008 2007 2006
Income taxes charged to the consolidated statement of
operations for continuing operations:
Current:
Federal ............................................. $ 68,114 $ 37,815 $ 772
State ............................................... 4,415 9,188 3,676
Total current ................................... 72,529 47,003 4,448
Deferred:
Federal ............................................. 32,984 75,495 128,534
State ............................................... 983 5,516 3,497
Total deferred .................................. 33,967 81,011 132,031
Subtotal income taxes for continuing
operations . .............................. 106,496 128,014 136,479
Income taxes charged to the consolidated statement of
operations for discontinued operations:
Current:
Federal ............................................. — — 3,018
State ............................................... — — 2,004
Total current ................................... — — 5,022
Deferred:
Federal ............................................. — — 47,732
State ............................................... — — 3,835
Total deferred .................................. — — 51,567
Subtotal income taxes for discontinued
operations . .............................. — — 56,589
Total income taxes charged to the consolidated statement of
operations (a).............................................. 106,496 128,014 193,068
Income taxes charged (credited) to shareholders’ equity:
Deferred income tax benefits on unrealized/realized gains
or losses on securities classified as available-for-sale . . . . — (11) (35)
Current benefit arising from stock options exercised and
restricted stock . ....................................... (4,877) (552) (3,777)
Deferred income taxes (benefits) arising from the recognition
of additional pension/OPEB liability . . . ..................... (88,410) (6,880) 24,707
Deferred tax benefit from recording adjustments from the
adoption of SAB No. 108 .................................. — — (17,339)
Income taxes charged (credited) to shareholders’
equity (b) . ....................................... (93,287) (7,443) 3,556
Total income taxes: (a) plus (b). .............................. $ 13,209 $120,571 $196,624
In July 2006, the FASB issued FASB Interpretation No. (FIN) 48, “Accounting for Uncertainty in Income
Taxes.” Among other things, FIN No. 48 requires applying a “more likely than not” threshold to the recognition
and derecognition of uncertain tax positions either taken or expected to be taken in the Company’s income tax
returns. We adopted the provisions of FIN No. 48 in the first quarter of 2007. The total amount of our gross
FIN No. 48 tax liability for tax positions that may not be sustained under a “more likely than not” threshold
amounts to $52.9 million as of December 31, 2008. A decrease of $16.2 million in the balance, including $4.9
million of accrued interest, since December 31, 2007 resulted from the expiration of certain statute of
limitations on April 15, 2008. The amount of our total FIN No. 48 tax liabilities reflected above that would
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements