JetBlue Airlines 2011 Annual Report Download - page 83

The effective tax rate on income before income taxes differed from the federal income tax statutory rate for
the years ended December 31 for the following reasons (in millions):
2011 2010 2009
Income tax expense at statutory rate ........................................... $51 $57 $36
Increase (decrease) resulting from:
State income tax, net of federal benefit ....................................... 5 6 4
Non-deductible meals .................................................... 2 2 2
Valuation allowance ...................................................... — (2) (1)
Other, net .............................................................. 1 1 2
Total income tax expense .................................................... $59 $64 $43
Cash payments for income taxes were zero in 2011, $1 million in 2010 and zero in 2009.
The net deferred taxes below include a current net deferred tax asset of $99 million and a long-term net
deferred tax liability of $392 million at December 31, 2011, and a current net deferred tax asset of $89 million
and a long-term net deferred tax liability of $327 million at December 31, 2010.
The components of our deferred tax assets and liabilities as of December 31 are as follows (in millions):
2011 2010
Deferred tax assets:
Net operating loss carryforwards ....................................... $175 $186
Employee benefits .................................................. 37 35
Deferred revenue/gains ............................................... 92 86
Derivative instruments ............................................... 12 6
Capital loss carryforwards ............................................ 20 20
Other ............................................................. 24 26
Valuation allowance ................................................. (21) (21)
Deferred tax assets ................................................ 339 338
Deferred tax liabilities:
Accelerated depreciation ............................................. (632) (576)
Deferred tax liabilities ............................................. (632) (576)
Net deferred tax liability ................................................ $(293) $(238)
At December 31, 2011, we had U.S. Federal regular and alternative minimum tax net operating loss
(“NOL”) carryforwards of $495 million and $460 million, respectively, which begin to expire in 2024. In
addition, at December 31, 2011, we had deferred tax assets associated with state NOL and credit carryforwards
of $14 million and $3 million, respectively. The state NOLs begin to expire in 2012, while the credits carry
forward indefinitely. Our NOL carryforwards at December 31, 2011 include an unrecorded benefit of
approximately $9 million related to stock-based compensation that will be recorded in equity when, and to the
extent, realized. Section 382 of the Internal Revenue Code imposes limitations on a corporation’s ability to use
its NOL carryforwards if it experiences an “ownership change.” As of December 31, 2011, our valuation
allowance did not include any amounts attributable to this limitation; however, if an “ownership change” were to
occur in the future, the ability to use our NOLs could be limited.
In evaluating the realizability of the deferred tax assets, we assess whether it is more likely than not that
some portion, or all, of the deferred tax assets, will be realized. We consider, among other things, the generation
of future taxable income (including reversals of deferred tax liabilities) during the periods in which the related
temporary differences will become deductible. At December 31, 2011, we provided a $21 million valuation
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