Frontier Communications 2011 Annual Report Download - page 88

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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
F-25
(12) Income Taxes:
The following is a reconciliation of the provision for income taxes computed at federal statutory rates to the effective
rates for the years ended December 31, 2011, 2010 and 2009:
2011 2010 2009
Consolidated tax provision at federal statutory rate
State income tax provisions, net of federal income tax benefit 2.8 3.2 2.8
Reversal of tax credits 4.4
Non-deductible transaction costs 4.2
Tax reserve adjustment (5.5) 0.4
All other, net (0.8) (0.3) (1.6)
Effective tax rate
-
35.0%
36.2 %
35.0%
35.9 %
35.0%
42.5 %
-
-
- -
Income taxes for 2011 include the net reversal of a reserve for uncertain tax positions for $8.6 million and the reduction
of deferred tax balances based on the application of enacted state tax statutes for $6.8 million, partially offset by the
impact of a $10.8 million charge resulting from the enactment on May 25, 2011 of the Michigan Corporate Income Tax
that eliminated certain future tax deductions.
During 2010, Frontier reduced certain deferred tax assets of approximately $11.3 million related to Transaction costs
which were not tax deductible. These costs were incurred to facilitate the Transaction and as such had to be capitalized
for tax purposes. Income taxes for 2010 also include the impact of a $4.1 million charge resulting from health care
reform legislation associated with the passage of the Patient Protection and Affordable Care Act and of the Health Care
and Education Reconciliation Act of 2010 (the Acts). The health care reform legislation enacted in March 2010 under
the Acts eliminated the tax deduction for the subsidy that the Company receives under Medicare Part D for prescription
drug costs.
The components of the net deferred income tax liability (asset) at December 31 are as follows: