MoneyGram 2011 Annual Report Download - page 129

Table of Contents
The amount and expiration dates of tax loss carry−forwards (not tax effected) and credit carry−forwards as of December 31, 2011 are as follows:
Expiration
(Amounts in thousands) Date Amount
United States federal and state loss carry−forwards 2012 −2031 1,071,134
United States federal tax credit carry−forwards 2020 −2024 10,794
United States federal tax credit carry−forwards Indefinite 24,671
The Company, or one of its subsidiaries, files income tax returns in the United States federal jurisdiction and various states and foreign jurisdictions. With a
few exceptions, the Company is no longer subject to foreign or United States federal, state and local income tax examinations for years prior to 2005. The
Company is subject to foreign, United States federal and certain state income tax examinations for 2005 through 2009. A United States federal income tax
examination for 2005 through 2007 is currently in administrative appeals and a United States federal income tax examination for 2008 and 2009 currently in
process.
Unrecognized tax benefits are recorded in “Accounts payable and other liabilities” in the Consolidated Balance Sheets. Following is a reconciliation of
unrecognized tax benefits for the year ended December 31:
(Amounts in thousands) 2011 2010 2009
Beginning balance $10,204 $10,711 $13,089
Additions based on tax positions related to the current year — — 832
Settlements — (296) (1,029)
Lapse in statute of limitations (533) (211) (2,181)
Reductions for tax positions of prior years (37) — —
Ending balance $ 9,634 $10,204 $10,711
As of December 31, 2011, the liability for unrecognized tax benefits was $9.6 million, all of which could impact the effective tax rate if recognized. The
Company accrues interest and penalties for unrecognized tax benefits through “Income tax expense (benefit)” in the Consolidated Statements of Income
(Loss). For the years ended December 31, 2011, 2010 and 2009, the Company accrued approximately $0.2 million, $0.3 million and $0.6 million,
respectively, in interest and penalties in its Consolidated Statements of Income (Loss), respectively. As of December 31, 2011 and 2010, the Company had a
liability of $1.6 million and $1.7 million, respectively, for interest and penalties related to its unrecognized tax benefits. As of December 31, 2011, it is not
possible to reasonably estimate the expected change to the total amount of unrecognized tax positions over the next 12 months.
The Company does not consider its earnings in its foreign entities to be permanently reinvested. As of December 31, 2011 and 2010, a deferred tax liability
of $5.9 million and $4.8 million, respectively, was recognized for the unremitted earnings of its foreign entities.
Note 15 — Commitments and Contingencies
Operating Leases — The Company has various non−cancelable operating leases for buildings and equipment that terminate through 2021. Certain of these
leases contain rent holidays and rent escalation clauses based on pre−determined annual rate increases. The Company recognizes rent expense under the
straight−line method over the term of the lease. Any difference between the straight−line rent amounts and amounts payable under the leases are recorded as
deferred rent in “Accounts payable and other liabilities” in the Consolidated Balance Sheets. Cash or lease incentives received under certain leases are
recorded as deferred rent when the incentive is received and amortized as a reduction to rent over the term of the lease using the straight−line method.
Incentives received relating to tenant improvements are recognized as a reduction of rent expense under the straight−line method over the term of the lease.
Tenant improvements are capitalized as leasehold improvements and depreciated over the shorter of the remaining term of the lease or 10 years. At
December 31, 2011, the deferred rent liability relating to these incentives was $2.7 million.
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