Metro PCS 2010 Annual Report Download - page 134

MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008
F-28
2010 2009
Deferred tax assets:
Net operating loss carryforwar
d
......................................................................................................... $ 361,617 $ 342,693
Deferred revenue ............................................................................................................................... 19,050 15,867
Allowance for uncollectible accounts ................................................................................................ 1,154 871
Deferred rent ...................................................................................................................................... 33,420 25,599
Deferred compensation ...................................................................................................................... 56,157 44,938
Asset retirement obligation ................................................................................................................ 4,770 3,804
Credit carryforwards .......................................................................................................................... 12,747 5,892
Other comprehensive loss .................................................................................................................. 3,171 9,624
Capital loss limitation ........................................................................................................................ 7,410 0
Transaction taxes ............................................................................................................................... 5,498 4,840
Unrealized loss on investments.......................................................................................................... 39,871 47,158
Othe
r
.................................................................................................................................................. 14,779
12,507
Gross deferred tax assets .................................................................................................................... 559,644 513,793
Valuation allowance .......................................................................................................................... (47,158) (47,158)
Total deferred tax assets, net .............................................................................................................. 512,486 466,635
Deferred tax liabilities:
Depreciation ....................................................................................................................................... (655,566) (570,816)
Deferred costs .................................................................................................................................... (32,332) (23,040)
FCC licenses ...................................................................................................................................... (326,954) (264,916)
Partnership interest ............................................................................................................................ (130,679) (114,952)
Othe
r
.................................................................................................................................................. (3,723)
(3,269)
Deferred tax liabilities ....................................................................................................................... (1,149,254) (976,993)
Net deferred tax liability .................................................................................................................... $ (636,768)
$ (510,358)
Deferred tax assets and liabilities at December 31, 2010 and 2009 are as follows (in thousands):
2010 2009
Current deferred tax asset .................................................................................................................... $ 6,290 $ 1,948
Non-current deferred tax liability ........................................................................................................ (643,058) (512,306)
Net deferred tax liability ...................................................................................................................... $ (636,768) $ (510,358)
At December 31, 2010 the Company has approximately $978.2 million and $353.6 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 $103.5 million and $68.5
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, 2010 the Company has approximately $0.1 million of alternative minimum tax credit
carryforwards for state income tax purposes. These alternative minimum tax credits carryforward indefinitely.
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 loss on investments. During 2009, an impairment of investments was recorded for
financial statement purposes resulting in an unrealized loss on investments. 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. Therefore, the Company has a valuation allowance of $47.2 million as of December 31, 2010 and
2009.