MoneyGram 2009 Annual Report Download - page 62

Table of Contents
Deferred tax assets and liabilities are recorded based on the future tax consequences attributable to temporary differences that exist
between the financial statement carrying value of assets and liabilities and their respective tax basis, and operating loss and tax credit
carry-backs and carry-forwards on a taxing jurisdiction basis. We measure deferred tax assets and liabilities using enacted statutory tax
rates that will apply in the years in which we expect the temporary differences to be recovered or paid.
We establish valuation allowances for our deferred tax assets based on a more likely than not threshold. In assessing the need for a
valuation allowance, we consider both positive and negative evidence related to the likelihood that the deferred tax assets will be realized.
If, based on the weight of available evidence, it is deemed more likely than not that the deferred tax assets will not be realized, we
establish or maintain a valuation allowance. We weigh the positive and negative evidence commensurate with the extent it may be
objectively verified. It is generally difficult for positive evidence regarding projected future taxable income, exclusive of reversing
taxable temporary differences, to outweigh objective negative evidence, particularly cumulative losses. Our assessment of whether a
valuation allowance is required or should be adjusted requires judgment and is completed on a taxing jurisdiction basis. We consider,
among other matters: the nature, frequency and severity of any cumulative financial reporting losses; the ability to carry back losses to
prior years; future reversals of existing taxable temporary differences; tax planning strategies; and projections of future taxable income.
The accounting treatment of our deferred taxes represents our best estimate of these items. A valuation allowance established or revised
as a result of our assessment is recorded through "Income tax (benefit) expense" in our Consolidated Statements of Loss. Changes in our
current estimates due to unanticipated events, or other factors, could have a material effect on our financial condition and results of
operations.
We account for our liability for unrecognized tax benefits using a two-step approach to recognizing and measuring uncertain tax
positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is
more likely than not that the position will be sustained upon audit by the tax authority, including resolution of any related appeals or
litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50 percent likely of being
realized upon settlement. Our tax filings for various periods are subject to audit by various tax authorities. Actual tax amounts may be
materially different from amounts accrued based upon the results of audits by the tax authorities. The amount of income tax or benefit
recognized in our Consolidated Statements of Loss includes the impact of reserve provisions and changes to reserves that are considered
appropriate based on current information and management's best estimate, as well as any applicable related net interest and penalties.
Prior to our June 2004 spin-off from Viad, income taxes were determined on a separate return basis as if we had not been eligible to be
included in the consolidated income tax return of Viad and its affiliates. We are considered the divesting entity in the spin-off and treated
as the "accounting successor" to Viad, with the continuing business of Viad is referred to as "New Viad." As part of the spin-off, we
entered into a Tax Sharing Agreement with Viad which provides for, among other things, the allocation between MoneyGram and New
Viad of federal, state, local and foreign tax liabilities and tax liabilities resulting from the audit or other adjustment to previously filed tax
returns. Although we believe that we have appropriately proportioned such taxes between MoneyGram and Viad, subsequent adjustments
may occur upon filing of amended returns or resolution of audits by various taxing authorities.
Recent Accounting Developments
Recent accounting developments are set forth in Note 3 — Summary of Significant Accounting Policies of the Notes to Consolidated
Financial Statements.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K and the documents incorporated by reference herein may contain forward-looking statements with
respect to the financial condition, results of operation, plans, objectives, future performance and business of MoneyGram International,
Inc. and its subsidiaries. Statements preceded by, followed by or that include words such as "may," "will," "expect," "anticipate,"
"continue," "estimate," "project," "believes" or similar expressions are intended to identify some of the forward-looking statements within
the meaning of the
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