Metro PCS 2009 Annual Report Download - page 143

MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2009, 2008 and 2007
F-29
Deferred taxes are provided for those items reported in different periods for income tax and financial reporting
purposes. The Company’s net deferred tax liability consisted of the following deferred tax assets and liabilities (in
thousands):
2009 2008
Deferred tax assets:
Net operating loss carryforward......................................................................................................... $ 342,693 $ 141,965
Deferred revenue ............................................................................................................................... 15,867 15,917
Allowance for uncollectible accounts ................................................................................................ 871 1,645
Deferred rent...................................................................................................................................... 25,599 19,342
Deferred compensation ...................................................................................................................... 44,938 28,609
Asset retirement obligation................................................................................................................ 3,804 2,161
Credit carryforwards.......................................................................................................................... 5,892 2,583
Other comprehensive loss.................................................................................................................. 9,624 21,464
Transaction taxes ............................................................................................................................... 4,840 3,884
Unrealized loss on investments.......................................................................................................... 47,158 47,657
Other.................................................................................................................................................. 12,507 19,933
Gross deferred tax assets.................................................................................................................... 513,793 305,160
Valuation allowance .......................................................................................................................... (47,158) (47,657)
Total deferred tax assets, net.............................................................................................................. 466,635 257,503
Deferred tax liabilities:
Depreciation....................................................................................................................................... (570,816) (352,106)
Deferred cost of handset sales............................................................................................................ (23,040) (19,349)
FCC licenses...................................................................................................................................... (264,916) (199,422)
Partnership interest ............................................................................................................................ (114,952) (70,284)
Other.................................................................................................................................................. (3,269) (4,019)
Deferred tax liabilities ....................................................................................................................... (976,993) (645,180)
Net deferred tax liability .................................................................................................................... $ (510,358) $ (387,677)
Deferred tax assets and liabilities at December 31, 2009 and 2008 are as follows (in thousands):
2009 2008
Current deferred tax asset .................................................................................................................... $ 1,948 $ 1,832
Non-current deferred tax liability ........................................................................................................ (512,306) (389,509)
Net deferred tax liability ...................................................................................................................... $ (510,358) $ (387,677)
At December 31, 2009, the Company has approximately $909.1 million and $360.4 million of financial reporting
net operating loss carryforwards for federal and state income tax purposes, respectively. The Company’s net
operating loss carryforwards for federal and state tax purposes were approximately $93.9 million and $39.6 million,
respectively, greater than its net operating loss carryforwards for financial reporting purposes due to the Company’s
inability to realize excess tax benefits under ASC 718 until such benefits reduce income taxes payable. The federal
net operating loss will begin to expire in 2023. The state net operating losses will begin to expire in 2013. At
December 31, 2009 the Company has approximately $0.2 million of alternative minimum tax credit carryforwards
for state income tax purposes. These alternative minimum tax credits carryforward indefinitely.
The Company took advantage of Worker, Homeownership and Business Assistance Act of 2009. The act
removed an alternative minimum tax limitation on certain carryback years which allowed the Company to carryback
$1.4 million and $4.6 million of alternative minimum tax net operating losses for 2006 and 2007, respectively.
Financial statement deferred tax assets must be reduced by a valuation allowance if, based on the weight of
available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Company believes that realization of the deferred tax assets is more likely than not based on the future reversal
of existing temporary differences which give rise to the deferred tax liabilities, with the exception of the deferred tax
asset related to the unrealized tax loss. During 2009 and 2008, an impairment of investments was recorded for
financial statement purposes resulting in an unrealized loss. Recognition of this unrealized loss for tax purposes
would result in a capital loss. The Company has not generated capital gains within the carryback period and does
not anticipate generating sufficient capital gains within the carryforward period to realize this deferred tax asset.